FORM
10-Q


United
States


Securities
and Exchange Commission


Washington,
D. C. 20549






(Mark
      One)X
            Quarterly Report
      Pursuant to Section 13 or 15(d)of the Securities
      Exchange Act of 1934For the quarterly
      period ended:   November 30, 2009OR__
            Transition Report
      Pursuant to Section 13 or 15(d)of the Securities
      Exchange Act of 1934




Commission
File Number: 0-14820





IMMUCOR,
INC.


(Exact
name of registrant as specified in its charter)




Georgia
            22-2408354(State or other
      jurisdiction of
            (I.R.S.
      Employerincorporation or
      organization)
            Identification
      No.)





3130
Gateway Drive     Norcross, Georgia 30071


(Address
of principal executive offices)     (Zip
Code)





Registrant's
telephone number:  (770) 441-2051





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.





Yes X        No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such
files).





Yes       No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):




Large
      accelerated filer X
              Accelerated
      filerNon-accelerated
      filer
              Smaller
      reporting company(do
      not check if smaller reporting company)




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





Yes       No  X





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.


As of
December 31, 2009: Common Stock, $0.10 Par Value – 69,864,253







IMMUCOR,
INC. AND SUBSIDIARIES





FORM
10-Q





INDEX




PagePART
      I.       FINANCIAL
      INFORMATIONItem
      1.
              Financial
      StatementsCondensed
      Consolidated Balance Sheets as of November 30, 2009 (unaudited) andMay
      31, 2009
              3Condensed
      Consolidated Statements of Income for the three and six months
      ended
                November
      30, 2009 (unaudited) and November 30, 2008 (unaudited)
              4Condensed
      Consolidated Statement of Shareholders’ Equity and ComprehensiveIncome
                  for
      the period June 1, 2009 through November 30, 2009
    (unaudited)
              5Condensed
      Consolidated Statements of Cash Flows for the six months endedNovember
      30, 2009
                (unaudited)
      and November 30, 2008 (unaudited)
              6Notes
      to Condensed Consolidated Financial Statements (unaudited)
              7Item
      2.
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              17Item
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              28Item
      4.
              Controls
      and Procedures
              28PART
      II.       OTHER
    INFORMATIONItem
      1.
              Legal
      Proceedings
              28Item
      1A.
              Risk
      Factors
              29Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              30Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              30Item
      6.
              Exhibits
              31SIGNATURES
              31




2




ITEM
      1. Financial StatementsIMMUCOR,
      INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED BALANCE SHEETS(Amounts
      in thousands, except share data)  November
      30, 2009
                
                
                May
      31, 2009ASSETS
                
                (Unaudited)CURRENT
      ASSETS:Cash
      and cash equivalents
                
                $
                156,066
                
                
                $
                136,461Trade
      accounts receivable, net of allowance for doubtful accounts of $2,367
      atNovember
      30, 2009 and $2,179 at May 31, 2009
                
                
                60,789
                
                
                
                57,017Inventories
                
                
                42,481
                
                
                
                38,256Deferred
      income tax assets, current portion
                
                
                7,801
                
                
                
                7,979Prepaid
      expenses and other current assets
                
                
                4,733
                
                
                
                5,137Total
      current assets
                
                
                271,870
                
                
                
                244,850PROPERTY
      AND EQUIPMENT, Net
                
                
                48,811
                
                
                
                43,461GOODWILL
                
                
                95,778
                
                
                
                97,255INTANGIBLE
      ASSETS, Net
                
                
                59,831
                
                
                
                61,355DEFERRED
      INCOME TAX ASSETS
                
                
                3,995
                
                
                
                3,638OTHER
      ASSETS
                
                
                773
                
                
                
                781Total
      assets
                
                $
                481,058
                
                
                $
                451,340LIABILITIES
      AND SHAREHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                
                $
                10,144
                
                
                $
                9,344Accrued
      expenses and other current liabilities
                
                
                17,380
                
                
                
                20,253Income
      taxes payable
                
                
                7,783
                
                
                
                11,469Deferred
      revenue, current portion
                
                
                10,812
                
                
                
                11,222Total
      current liabilities
                
                
                46,119
                
                
                
                52,288DEFERRED
      REVENUE
                
                
                8,826
                
                
                
                10,871DEFERRED
      INCOME TAX LIABILITIES
                
                
                1,215
                
                
                
                1,272OTHER
      LONG-TERM LIABILITIES
                
                
                2,299
                
                
                
                2,331Total
      liabilities
                
                
                58,459
                
                
                
                66,762COMMITMENTS
      AND CONTINGENCIES (Note 9)
                
                
                -
                
                
                
                -SHAREHOLDERS'
      EQUITY:Common
      stock, $0.10 par value; authorized 120,000,000 shares, issued and
      outstanding69,862,633
      and 70,456,522 shares at November 30, 2009 and May 31, 2009,
      respectively
                
                
                6,986
                
                
                
                7,046Additional
      paid-in capital
                
                
                33,371
                
                
                
                42,012Retained
      earnings
                
                
                368,277
                
                
                
                327,242Accumulated
      other comprehensive income
                
                
                13,965
                
                
                
                8,278Total
      shareholders' equity
                
                
                422,599
                
                
                
                384,578Total
      liabilities and shareholders' equity
                
                $
                481,058
                
                
                $
                451,340
  The
      accompanying notes are an integral part of these Condensed Consolidated
      Financial Statements.
 3
 IMMUCOR,
      INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF INCOME(Amounts
      in thousands, except per share data)(Unaudited)  Three
      Months Ended
                
                
                Six
      Months EndedNovember
      30,
                
                
                November
      30,
                
                
                November
      30,
                
                
                November
      30,2009
                
                
                2008
      (1)
                
                
                2009
                
                
                2008
      (1)NET
      SALES
                
                $
                82,570
                
                
                $
                73,021
                
                
                $
                165,641
                
                
                $
                146,197COST
      OF SALES
                  (exclusive
      of amortization shown separately below)
                
                
                24,431
                
                
                
                19,463
                
                
                
                47,813
                
                
                
                39,214GROSS
      PROFIT
                
                
                58,139
                
                
                
                53,558
                
                
                
                117,828
                
                
                
                106,983OPERATING
      EXPENSES:Research
      and development
                
                
                3,898
                
                
                
                2,896
                
                
                
                7,721
                
                
                
                4,777Selling
      and marketing
                
                
                9,765
                
                
                
                10,538
                
                
                
                19,229
                
                
                
                19,732Distribution
                
                
                3,721
                
                
                
                3,549
                
                
                
                7,226
                
                
                
                7,017General
      and administrative
                
                
                9,020
                
                
                
                7,642
                
                
                
                17,508
                
                
                
                15,375Amortization
      expense
                
                
                1,073
                
                
                
                1,071
                
                
                
                2,140
                
                
                
                1,596Total
      operating expenses
                
                
                27,477
                
                
                
                25,696
                
                
                
                53,824
                
                
                
                48,497INCOME
      FROM OPERATIONS
                
                
                30,662
                
                
                
                27,862
                
                
                
                64,004
                
                
                
                58,486NON-OPERATING
      INCOME (EXPENSE):Interest
      income
                
                
                94
                
                
                
                586
                
                
                
                284
                
                
                
                1,380Interest
      expense
                
                
                (8
                )
                
                
                (77
                )
                
                
                (13
                )
                
                
                (203
                )Other,
      net
                
                
                (48
                )
                
                
                (1,230
                )
                
                
                (18
                )
                
                
                (1,650
                )Total
      non-operating income (expense)
                
                
                38
                
                
                
                (721
                )
                
                
                253
                
                
                
                (473
                )INCOME
      BEFORE INCOME TAXES
                
                
                30,700
                
                
                
                27,141
                
                
                
                64,257
                
                
                
                58,013PROVISION
      FOR INCOME TAXES
                
                
                10,998
                
                
                
                9,803
                
                
                
                23,222
                
                
                
                20,718NET
      INCOME
                
                $
                19,702
                
                
                $
                17,338
                
                
                $
                41,035
                
                
                $
                37,295Earnings
      per share:Per
      common share - basic
                
                $
                0.28
                
                
                $
                0.25
                
                
                $
                0.58
                
                
                $
                0.53Per
      common share - diluted
                
                $
                0.28
                
                
                $
                0.24
                
                
                $
                0.58
                
                
                $
                0.52
  (1)  Certain
      prior year operating expenses have been reclassified to conform with
      current year presentation.The
      accompanying notes are an integral part of these Condensed Consolidated
      Financial Statements.
 4
  IMMUCOR,
      INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE
      INCOME(Unaudited,
      amounts in thousands)  AccumulatedAdditional
                
                
                
                
                
                Other
                
                
                TotalCommon
      Stock
                
                
                Paid-In
                
                
                Retained
                
                
                Comprehensive
                
                
                Shareholders’Shares
                
                
                Amount
                
                
                Capital
                
                
                Earnings
                
                
                Income*
                
                
                EquityBALANCE,
      MAY 31, 2009
                
                
                70,456
                
                
                $
                7,046
                
                
                $
                42,012
                
                
                $
                327,242
                
                
                $
                8,278
                
                
                $
                384,578Shares
      issued under employee stock plan
                
                
                66
                
                
                
                6
                
                
                
                204
                
                
                
                -
                
                
                
                -
                
                
                
                210Share-based
      compensation expense
                
                
                -
                
                
                
                -
                
                
                
                2,650
                
                
                
                -
                
                
                
                -
                
                
                
                2,650Stock
      repurchases and retirements
                
                
                (659
                )
                
                
                (66
                )
                
                
                (11,661
                )
                
                
                -
                
                
                
                -
                
                
                
                (11,727
                )Tax
      benefits related to share-based compensation
                
                
                -
                
                
                
                -
                
                
                
                166
                
                
                
                -
                
                
                
                -
                
                
                
                166Comprehensive
      income:Foreign
      currency translation adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,687
                
                
                
                5,687Net
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                41,035
                
                
                
                -
                
                
                
                41,035Total
      comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                46,722BALANCE,
      November 30, 2009
                
                
                69,863
                
                
                $
                6,986
                
                
                $
                33,371
                
                
                $
                368,277
                
                
                $
                13,965
                
                
                $
                422,599
  *Accumulated
      Other Comprehensive Income balance primarily consists of foreign currency
      translation adjustments and has no tax effect.The
      accompanying notes are an integral part of these Condensed Consolidated
      Financial Statements.





5




IMMUCOR,
      INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited,
      amounts in thousands)  Six
      Months EndedNovember
      30,
                
                
                November
      30,2009
                
                
                2008OPERATING
      ACTIVITIES:Net
      income
                
                $
                41,035
                
                
                $
                37,295Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                
                
                8,024
                
                
                
                6,313Loss
      on retirement of fixed assets
                
                
                192
                
                
                
                129Provision
      for doubtful accounts
                
                
                198
                
                
                
                450Share-based
      compensation expense
                
                
                2,650
                
                
                
                2,478Deferred
      income taxes
                
                
                (2,078
                )
                
                
                850Excess
      tax benefit from share-based compensation
                
                
                (166
                )
                
                
                (2,880
                )Changes
      in operating assets and liabilities, net of effects from acquired
      companies:Accounts
      receivable, trade
                
                
                (2,067
                )
                
                
                (7,519
                )Income
      taxes
                
                
                1,172
                
                
                
                5,578Inventories
                
                
                (9,625
                )
                
                
                (2,045
                )Other
      assets
                
                
                325
                
                
                
                (2,968
                )Accounts
      payable
                
                
                613
                
                
                
                156Deferred
      revenue
                
                
                (2,605
                )
                
                
                (1,018
                )Accrued
      expenses and other liabilities
                
                
                (3,522
                )
                
                
                (4,511
                )Cash
      provided by operating activities
                
                
                34,146
                
                
                
                32,308INVESTING
      ACTIVITIES:Purchases
      of property and equipment
                
                
                (4,484
                )
                
                
                (3,602
                )Acquisition
      of businesses, net of cash acquired
                
                
                -
                
                
                
                (108,537
                )Cash
      used in investing activities
                
                
                (4,484
                )
                
                
                (112,139
                )FINANCING
      ACTIVITIES:Repayments
      of long-term debt and liabilities
                
                
                -
                
                
                
                (229
                )Repurchase
      of common stock
                
                
                (11,727
                )
                
                
                (5,644
                )Proceeds
      from exercise of stock options
                
                
                210
                
                
                
                2,452Excess
      tax benefit from share-based compensation
                
                
                166
                
                
                
                2,880Cash
      used in financing activities
                
                
                (11,351
                )
                
                
                (541
                )EFFECT
      OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
                
                
                1,294
                
                
                
                (2,382
                )INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS
                
                
                19,605
                
                
                
                (82,754
                )CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                
                
                136,461
                
                
                
                175,056CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                156,066
                
                
                $
                92,302SUPPLEMENTAL
      INFORMATION:Tax
      paid
                
                $
                24,121
                
                
                $
                14,318Interest
      paid
                
                
                -
                
                
                
                33NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Shares
      surrendered for amounts due on stock options exercised
                
                $
                -
                
                
                $
                516Movement
      from inventory to property and equipment of instruments placed on rental
      agreements
                
                
                6,197
                
                
                
                2,762
  The
      accompanying notes are an integral part of these Condensed Consolidated
      Financial Statements.


6




IMMUCOR,
INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements


(Unaudited)




1.
            NATURE
      OF BUSINESS AND BASIS OF
PRESENTATION




Nature
of Business


Immucor,
Inc. (“Immucor” and, together with its wholly owned subsidiaries, the “Company”)
develops, manufactures and sells a complete line of reagents and automated
systems used primarily by hospitals, clinical laboratories and donor centers in
a number of tests performed to detect and identify certain properties of the
cell and serum components of human blood used for the purpose of blood
transfusion. The Company operates facilities in the United States, Canada,
Europe and Japan.  The unaudited condensed consolidated financial
statements include the accounts of the Company and all of its
subsidiaries.





Basis
of Presentation


The
accompanying condensed consolidated financial statements are unaudited and have
been prepared in accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”) for interim financial information, and the Securities and Exchange
Commission’s (“SEC”) instructions for Form 10-Q and Article 10 of Regulation
S-X.  Accordingly, they do not include all of the information and
footnotes required by U.S. GAAP for complete financial statements. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation of the unaudited
condensed consolidated financial statements have been recorded in the interim
periods presented.  These unaudited, condensed consolidated financial
statements should be read in conjunction with the Company’s audited,
consolidated financial statements and related notes for the year ended May 31,
2009, included in the Company’s Annual Report on Form 10-K.





The
accompanying condensed consolidated financial statements present results of
operations for the three and six months ended November 30, 2009. These results
are not necessarily indicative of the results that may be achieved for the year
ending May 31, 2010, or any other period.





Basis
of Consolidation


The
condensed consolidated financial statements include the accounts of Immucor and
all its subsidiaries. All significant inter-company balances and transactions
have been eliminated in consolidation.




2.
            INVENTORIES




Inventories
are stated at the lower of cost (first-in, first-out basis) or market (net
realizable value):




November
      30, 2009
              
              
              May
      31, 2009(in
      thousands)Raw
      materials and supplies
              
              $
              8,938
              
              
              $
              8,506Work
      in process
              
              
              2,935
              
              
              
              3,486Finished
      goods
              
              
              30,608
              
              
              
              26,264$
              42,481
              
              
              $
              38,256






3.
            SHAREHOLDERS’
      EQUITY




During
the first quarter of fiscal 2010, in compliance with statutory tax withholding
requirements, the Company reacquired from certain restricted shareholders an
aggregate of 9,481 shares valued at $0.2 million. During the first quarter of
fiscal 2009, the Company similarly either withheld from certain option exercises
or reacquired from certain restricted shareholders an aggregate of 34,715 shares
valued at $1.0 million. The Company retired these shares and disclosed their
value as ‘Stock repurchases and retirements’ in the condensed consolidated
statement of shareholders’ equity and comprehensive income and as ‘Repurchase of
common stock’ under financing activities in the condensed consolidated
statements of cash flows.





The
shares acquired were returned to the status of authorized, but unissued
shares.




7


4.
            STOCK
      REPURCHASE PROGRAM




The
Company instituted a stock repurchase program in June 1998. In August 2009, the
Board of Directors authorized the Company to repurchase an additional 2,000,000
shares of the Company’s common stock under this repurchase program, bringing the
total authorized shares to 11,375,000.





During
the three and six months ended November 30, 2009, approximately 300,000 and
650,000 shares were repurchased in the open market under the 1998 repurchase
plan for $5.5 million and $11.6 million, respectively.  The Company
repurchased 200,000 shares for $4.7 million during the three and six months
ended November 30, 2008.  Shares that are repurchased by the Company are
returned to the status of authorized but unissued.
  As of
November 30, 2009, 9,178,356 shares had been repurchased under the program,
leaving 2,196,644 shares available for repurchase.  The Company’s
stock repurchase program does not have an expiration date.


5.
            SHARE-BASED
      COMPENSATION




Plan summary





During
the first six months of fiscal 2010, the Immucor, Inc. 2005 Long-Term Incentive
Plan (the “2005 Plan”) was the only plan under which the Company was authorized
to grant stock incentive awards. Under the 2005 Plan, the Company is able to
award stock options, stock appreciation rights, restricted stock, deferred
stock, and other performance-based awards as incentive and compensation to
employees and directors. Awards for up to 3,600,000 shares of the Company’s
common stock may be granted under the 2005 Plan.  There is a
restriction on the number of shares that may be used for awards other than stock
options (1,800,000), and a separate restriction on the number of shares that may
be used for grants of incentive stock options (also 1,800,000), but there is no
restriction on the number of shares that may be used for grants of non-incentive
stock options. As of November 30, 2009, awards for 2,213,721 shares have been
granted under the 2005 Plan and 1,386,279 shares are still available for future
awards, of which a maximum of 1,347,590 can be awarded as restricted shares.
Options are granted at the closing market price on the date of the grant. Option
awards generally vest equally over a four-year period and have a six-year
contractual term. Restricted stock awards generally vest equally over a
five-year period.  The 2005 Plan provides for accelerated vesting of
option and restricted stock awards if there is a change in control, as defined
in the 2005 Plan.





Valuation
method used and assumptions





The fair
value of each option grant in the three and six months ended November 30, 2009
and 2008 was estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average
assumptions:




Three
      Months Ended
                
                Six
      Months EndedNovember
      30,
                
                November
      30,
                
                November
      30,
                
                November
      30,2009
                
                2008
                
                2009
                
                2008Risk-free
      interest rate (1)
                
                1.93%
                
                2.88%
                
                2.16%
                
                3.27%Expected
      volatility (2)
                
                45.78%
                
                41.34%
                
                45.55%
                
                42.20%Expected
      life (years) (3)
                
                4.25
                
                4.25
                
                4.25
                
                4.25Expected
      dividend yield (4)
                
                -
                
                -
                
                -
                
                -





1.
            Based
      on the U.S. Treasury yield curve in effect at the time of
      grant.


2.
            Expected
      stock price volatility is based on the average historical volatility of
      the Company’s shares during the period corresponding to the expected
      life of the options.


3.
            Represents the
      period of time options are expected to remain
      outstanding.As the Company has so far only awarded
      “plain vanilla options” as described by ASC 718-10-S99, “Compensation –
      Stock Compensation: Overall: SEC Materials”, the Company used the
      “simplified method” for determining the expected life of the options
      granted. The “simplified method” calculates expected term as the sum of
      the vesting term and the original contractual term divided by two. The
      Company will continue to use the “simplified method” until such time that
      it has sufficient historical data for options with
      six-year contractual termsto estimate the expected term of these
      share-based awards.


4.
            The
      Company has not paid dividends on its common stock and does not expect to
      pay dividends on its common stock in the near
  future.





8


Stock
option activity





The
options granted under the 2005 Plan during the six months ended November 30,
2009 have a six-year term with vesting of 25% at each anniversary of the
issuance date; the restricted shares vest 20% at each anniversary of the
issuance date.  The Company has not granted any option or share awards
with market or performance conditions. Compensation costs for stock options with
tiered vesting terms are recognized evenly over the vesting
periods.





The
following is a summary of the changes in outstanding options for the six months
ended November 30, 2009:





Number
      of Shares
              
              
              Weighted
      Average Exercise Price
              
              
              Weighted
      Average Remaining Contractual Life (years)
              
              
              Aggregate
      Intrinsic Value (1)(in
      thousands)Outstanding
      at May 31, 2009
              
              
              2,556,096
              
              
              $
              18.26Granted  (2)
              
              
              307,107
              
              
              $
              16.48Exercised  (3)
              
              
              (26,371
              )
              
              $
              7.99Forfeited
              
              
              (49,863
              )
              
              $
              26.52Expired
              
              
              (16,381
              )
              
              $
              25.02Outstanding
      at November 30, 2009
              
              
              2,770,588
              
              
              $
              17.97
              
              
              
              4.1
              
              
              $
              13,787Exercisable
      at November 30, 2009
              
              
              1,680,422
              
              
              $
              14.06
              
              
              
              3.7
              
              
              $
              12,948


1)
            The
      aggregate intrinsic value in the above table represents the total pre-tax
      intrinsic value (the difference between the Company’s closing stock price
      on the last trading day of the quarter and the exercise price, multiplied
      by the number of options that are in the money as of the date
      presented).


2)
            The
      weighted-average grant-date fair value of share options granted during the
      first six months of fiscal years 2010 and 2009 was $6.38 and $10.65,
      respectively.


3)
            The
      total intrinsic value of share options exercised during the first six
      months of fiscal years 2010 and 2009 was $0.3 million and $9.6 million,
      respectively.





As of
November 30, 2009, there was $8.4 million of total unrecognized compensation
cost related to nonvested stock option awards. This compensation cost is
expected to be recognized through November 2013, based on existing vesting terms
with the weighted average remaining expense recognition period being
approximately 2.6 years.





Restricted
stock activity





The
following is a summary of the changes in nonvested restricted stock for the
three months ended November 30, 2009:




Number
      of Shares
              
              
              Weighted-Average
      Grant-Date Fair ValueNonvested
      stock outstanding at May 31, 2009
              
              
              141,190
              
              
              $
              23.72Granted
              
              
              251,512
              
              
              $
              16.27Vested
              
              
              (39,224
              )
              
              $
              22.92Forfeited
              
              
              (7,365
              )
              
              $
              18.35Nonvested
      stock outstanding at November 30, 2009
              
              
              346,113
              
              
              $
              18.51




The total
fair value of restricted shares vested was $0.9 million
and $0.8 million during the six months endedNovember
30, 2009 and 2008,
respectively.





As of
November 30, 2009, there was $5.7 million of total unrecognized compensation
cost related to nonvested restricted stock awards. This compensation cost is
expected to be recognized through June 2014, based on existing vesting terms
with the weighted average remaining expense recognition period being
approximately 3.8 years.


9




6.
            COMPREHENSIVE
      INCOME




The
components of comprehensive income for the three and six months ended November
30, 2009 and 2008 are as follows (in thousands):





Three
      Months Ended
              
              
              Six
      Months EndedNovember
      30,
              
              
              November
      30,
              
              
              November
      30,
              
              
              November
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      income
              
              $
              19,702
              
              
              $
              17,338
              
              
              $
              41,035
              
              
              $
              37,295Net
      foreign currency translation adjustments
              
              
              4,433
              
              
              
              (6,391
              )
              
              
              5,687
              
              
              
              (11,349
              )Comprehensive
      income
              
              $
              24,135
              
              
              $
              10,947
              
              
              $
              46,722
              
              
              $
              25,946





No tax
effect is recorded for foreign currency translation adjustments as the foreign
net assets translated are deemed permanently invested.




7.
            EARNINGS
      PER SHARE




The
following table sets forth the computation of basic and diluted earnings per
share in accordance with ASC 260, “Earnings per
Share”.  Basic earnings per common share are calculated by
dividing net income by weighted-average common shares outstanding during the
period.  Diluted earnings per common share are calculated by dividing
net income by weighted-average common shares outstanding during the period plus
dilutive potential common shares, which are determined as follows (in thousands,
except per share data):




Three
      Months Ended
              
              
              Six
      Months EndedNovember
      30,
              
              November
      30,
              
              
              November
      30,
              
              
              November
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Numerator
      for basic and diluted earnings per share:Net
      Income
              
              $
              19,702
              
              
              $
              17,338
              
              
              $
              41,035
              
              
              $
              37,295Denominator:For
      basic earnings per share-
      weighted average shares basis
              
              
              70,090
              
              
              
              70,409
              
              
              
              70,244
              
              
              
              70,338Effect
      of dilutive stock options and restricted stock
              
              
              542
              
              
              
              818
              
              
              
              510
              
              
              
              881Denominator
      for diluted earnings per share-adjusted
      weighted average shares basis
              
              
              70,632
              
              
              
              71,227
              
              
              
              70,754
              
              
              
              71,219Earnings
      per common share – basic
              
              $
              0.28
              
              
              $
              0.25
              
              
              $
              0.58
              
              
              $
              0.53Earnings
      per common share – diluted
              
              $
              0.28
              
              
              $
              0.24
              
              
              $
              0.58
              
              
              $
              0.52




The
effect of 1,800,730 and 617,364 out-of-the-money options for the quarter ended
November 30, 2009 and 2008, respectively, and 1,912,674 and 543,145 out-of-money
options for the six months ended November 30, 2009 and 2008, respectively, were
excluded from the above calculation as inclusion of these securities would be
anti-dilutive.




8.
            SEGMENT
      AND GEOGRAPHIC INFORMATION




The
Company’s operations and segments are organized around geographic
areas.  Immucor’s “Europe” segment includes the operations of Belgium,
France, Germany, Italy, Portugal, Spain and the United Kingdom. The foreign
locations principally function as distributors of products developed and
manufactured by the Company in the United States and Canada. Effective August 4,
2008, the U.S. column also includes the operations of BioArray Solutions Ltd.
which was acquired during the first quarter of fiscal 2009. The accounting
policies applied in the preparation of the Company’s consolidated financial
statements are applied consistently across all segments.  Intersegment
sales are recorded at market price and are eliminated in
consolidation.





The basis
of segmentation has been refined since the Form 10-Q for the quarter ended
November 30, 2008. The information for European locations has been combined in
this report. In the prior year report, the information for certain European
locations was reported separately. All prior year data has been retroactively
adjusted to align with current reporting.





Segment
information for the three and six months ended November 30, 2009 and 2008 is
summarized below (in thousands).





10


For
      the Three Months Ended November 30, 2009U.S.
              
              
              Europe
              
              
              Canada
              
              
              Japan
              
              
              Elims
              
              
              ConsolidatedTraditional
      reagent revenues:Unaffiliated
      customers
              
              $
              39,320
              
              
              $
              7,674
              
              
              $
              2,333
              
              
              $
              2,034
              
              
              $
              -
              
              
              $
              51,361Affiliates
              
              
              1,181
              
              
              
              1,252
              
              
              
              91
              
              
              
              -
              
              
              
              (2,524
              )
              
              
              -Total
              
              
              40,501
              
              
              
              8,926
              
              
              
              2,424
              
              
              
              2,034
              
              
              
              (2,524
              )
              
              
              51,361Capture
      revenues:Unaffiliated
      customers
              
              
              12,484
              
              
              
              6,051
              
              
              
              1,154
              
              
              
              316
              
              
              
              -
              
              
              
              20,005Affiliates
              
              
              1,789
              
              
              
              804
              
              
              
              -
              
              
              
              -
              
              
              
              (2,593
              )
              
              
              -Total
              
              
              14,273
              
              
              
              6,855
              
              
              
              1,154
              
              
              
              316
              
              
              
              (2,593
              )
              
              
              20,005Net
      instrument revenues:Unaffiliated
      customers
              
              
              6,198
              
              
              
              2,930
              
              
              
              581
              
              
              
              316
              
              
              
              -
              
              
              
              10,025Affiliates
              
              
              1,220
              
              
              
              1,929
              
              
              
              -
              
              
              
              -
              
              
              
              (3,149
              )
              
              
              -Total
              
              
              7,418
              
              
              
              4,859
              
              
              
              581
              
              
              
              316
              
              
              
              (3,149
              )
              
              
              10,025Net
      molecular immunohematology revenues:Unaffiliated
      customers
              
              
              764
              
              
              
              415
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,179Affiliates
              
              
              391
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (391
              )
              
              
              -Total
              
              
              1,155
              
              
              
              415
              
              
              
              -
              
              
              
              -
              
              
              
              (391
              )
              
              
              1,179Net
      Sales
              
              
              63,347
              
              
              
              21,055
              
              
              
              4,159
              
              
              
              2,666
              
              
              
              (8,657
              )
              
              
              82,570Income
      (loss) from operations
              
              
              26,876
              
              
              
              1,748
              
              
              
              1,870
              
              
              
              407
              
              
              
              (239
              )
              
              
              30,662Depreciation
              
              
              1,893
              
              
              
              994
              
              
              
              103
              
              
              
              34
              
              
              
              -
              
              
              
              3,024Amortization
              
              
              1,010
              
              
              
              42
              
              
              
              -
              
              
              
              21
              
              
              
              -
              
              
              
              1,073Income
      tax (benefit) expense
              
              
              9,781
              
              
              
              651
              
              
              
              652
              
              
              
              -
              
              
              
              (86
              )
              
              
              10,998Capital
      expenditures
              
              
              1,558
              
              
              
              (686
              )
              
              
              51
              
              
              
              9
              
              
              
              -
              
              
              
              932







For
      the Three Months Ended November 30, 2008U.S.
              
              
              Europe
              
              
              Canada
              
              
              Japan
              
              
              Elims
              
              
              ConsolidatedTraditional
      reagent revenues:Unaffiliated
      customers
              
              $
              37,350
              
              
              $
              5,740
              
              
              $
              2,260
              
              
              $
              1,879
              
              
              $
              -
              
              
              $
              47,229Affiliates
              
              
              1,467
              
              
              
              999
              
              
              
              128
              
              
              
              -
              
              
              
              (2,594
              )
              
              
              -Total
              
              
              38,817
              
              
              
              6,739
              
              
              
              2,388
              
              
              
              1,879
              
              
              
              (2,594
              )
              
              
              47,229Capture
      revenues:Unaffiliated
      customers
              
              
              10,321
              
              
              
              5,094
              
              
              
              889
              
              
              
              220
              
              
              
              -
              
              
              
              16,524Affiliates
              
              
              1,408
              
              
              
              741
              
              
              
              -
              
              
              
              -
              
              
              
              (2,149
              )
              
              
              -Total
              
              
              11,729
              
              
              
              5,835
              
              
              
              889
              
              
              
              220
              
              
              
              (2,149
              )
              
              
              16,524Net
      instrument revenues:Unaffiliated
      customers
              
              
              5,969
              
              
              
              2,176
              
              
              
              383
              
              
              
              81
              
              
              
              -
              
              
              
              8,609Affiliates
              
              
              497
              
              
              
              1,340
              
              
              
              -
              
              
              
              -
              
              
              
              (1,837
              )
              
              
              -Total
              
              
              6,466
              
              
              
              3,516
              
              
              
              383
              
              
              
              81
              
              
              
              (1,837
              )
              
              
              8,609Net
      molecular immunohematology revenues:Unaffiliated
      customers
              
              
              659
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              659Affiliates
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Total
              
              
              659
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              659Net
      Sales
              
              
              57,671
              
              
              
              16,090
              
              
              
              3,660
              
              
              
              2,180
              
              
              
              (6,580
              )
              
              
              73,021Income
      (loss) from operations
              
              
              27,100
              
              
              
              (806
              )
              
              
              1,379
              
              
              
              125
              
              
              
              64
              
              
              
              27,862Depreciation
              
              
              1,423
              
              
              
              843
              
              
              
              64
              
              
              
              43
              
              
              
              -
              
              
              
              2,373Amortization
              
              
              984
              
              
              
              69
              
              
              
              -
              
              
              
              19
              
              
              
              -
              
              
              
              1,072Income
      tax expense
              
              
              9,155
              
              
              
              86
              
              
              
              531
              
              
              
              -
              
              
              
              31
              
              
              
              9,803Capital
      expenditures
              
              
              539
              
              
              
              1,009
              
              
              
              210
              
              
              
              5
              
              
              
              -
              
              
              
              1,763






11


For
      the Six Months Ended November 30, 2009U.S.
              
              
              Europe
              
              
              Canada
              
              
              Japan
              
              
              Elims
              
              
              ConsolidatedTraditional
      reagent revenues:Unaffiliated
      customers
              
              $
              82,160
              
              
              $
              14,950
              
              
              $
              4,719
              
              
              $
              4,251
              
              
              $
              -
              
              
              $
              106,080Affiliates
              
              
              2,423
              
              
              
              2,491
              
              
              
              136
              
              
              
              -
              
              
              
              (5,050
              )
              
              
              -Total
              
              
              84,583
              
              
              
              17,441
              
              
              
              4,855
              
              
              
              4,251
              
              
              
              (5,050
              )
              
              
              106,080Capture
      revenues:Unaffiliated
      customers
              
              
              23,586
              
              
              
              11,748
              
              
              
              2,414
              
              
              
              560
              
              
              
              -
              
              
              
              38,308Affiliates
              
              
              3,440
              
              
              
              1,534
              
              
              
              -
              
              
              
              -
              
              
              
              (4,974
              )
              
              
              -Total
              
              
              27,026
              
              
              
              13,282
              
              
              
              2,414
              
              
              
              560
              
              
              
              (4,974
              )
              
              
              38,308Net
      instrument revenues:Unaffiliated
      customers
              
              
              12,053
              
              
              
              5,740
              
              
              
              1,137
              
              
              
              387
              
              
              
              -
              
              
              
              19,317Affiliates
              
              
              2,633
              
              
              
              3,245
              
              
              
              -
              
              
              
              -
              
              
              
              (5,878
              )
              
              
              -Total
              
              
              14,686
              
              
              
              8,985
              
              
              
              1,137
              
              
              
              387
              
              
              
              (5,878
              )
              
              
              19,317Net
      molecular immunohematology revenues:Unaffiliated
      customers
              
              
              1,411
              
              
              
              525
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1,936Affiliates
              
              
              488
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (488
              )
              
              
              -Total
              
              
              1,899
              
              
              
              525
              
              
              
              -
              
              
              
              -
              
              
              
              (488
              )
              
              
              1,936Net
      Sales
              
              
              128,194
              
              
              
              40,233
              
              
              
              8,406
              
              
              
              5,198
              
              
              
              (16,390
              )
              
              
              165,641Income
      (loss) from operations
              
              
              55,574
              
              
              
              3,900
              
              
              
              3,940
              
              
              
              595
              
              
              
              (5
              )
              
              
              64,004Depreciation
              
              
              3,639
              
              
              
              2,001
              
              
              
              169
              
              
              
              75
              
              
              
              -
              
              
              
              5,884Amortization
              
              
              2,016
              
              
              
              84
              
              
              
              -
              
              
              
              40
              
              
              
              -
              
              
              
              2,140Income
      tax expense
              
              
              20,270
              
              
              
              1,460
              
              
              
              1,379
              
              
              
              -
              
              
              
              113
              
              
              
              23,222Capital
      expenditures
              
              
              4,169
              
              
              
              242
              
              
              
              56
              
              
              
              17
              
              
              
              -
              
              
              
              4,484Property
      & equipment, net
              
              
              34,981
              
              
              
              11,934
              
              
              
              1,645
              
              
              
              251
              
              
              
              -
              
              
              
              48,811Total
      assets at period end
              
              
              551,355
              
              
              
              81,028
              
              
              
              28,018
              
              
              
              19,936
              
              
              
              (199,279
              )
              
              
              481,058







12
 
  For
      the Six Months Ended November 30, 2008U.S.
                
                
                Europe
                
                
                Canada
                
                
                Japan
                
                
                Elims
                
                
                ConsolidatedTraditional
      reagent revenues:Unaffiliated
      customers
                
                $
                74,999
                
                
                $
                12,815
                
                
                $
                4,727
                
                
                $
                3,961
                
                
                $
                -
                
                
                $
                96,502Affiliates
                
                
                2,695
                
                
                
                2,114
                
                
                
                191
                
                
                
                -
                
                
                
                (5,000
                )
                
                
                -Total
                
                
                77,694
                
                
                
                14,929
                
                
                
                4,918
                
                
                
                3,961
                
                
                
                (5,000
                )
                
                
                96,502Capture
      revenues:Unaffiliated
      customers
                
                
                19,122
                
                
                
                10,587
                
                
                
                1,592
                
                
                
                396
                
                
                
                -
                
                
                
                31,697Affiliates
                
                
                3,288
                
                
                
                1,387
                
                
                
                -
                
                
                
                -
                
                
                
                (4,675
                )
                
                
                -Total
                
                
                22,410
                
                
                
                11,974
                
                
                
                1,592
                
                
                
                396
                
                
                
                (4,675
                )
                
                
                31,697Net
      instrument revenues:Unaffiliated
      customers
                
                
                11,344
                
                
                
                4,916
                
                
                
                782
                
                
                
                146
                
                
                
                -
                
                
                
                17,188Affiliates
                
                
                2,443
                
                
                
                3,094
                
                
                
                -
                
                
                
                -
                
                
                
                (5,537
                )
                
                
                -Total
                
                
                13,787
                
                
                
                8,010
                
                
                
                782
                
                
                
                146
                
                
                
                (5,537
                )
                
                
                17,188Net
      molecular immunohematology revenues:Unaffiliated
      customers
                
                
                810
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                810Affiliates
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Total
                
                
                810
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                810Net
      Sales
                
                
                114,701
                
                
                
                34,913
                
                
                
                7,292
                
                
                
                4,503
                
                
                
                (15,212
                )
                
                
                146,197Income
      (loss) from operations
                
                
                55,843
                
                
                
                (103
                )
                
                
                2,936
                
                
                
                48
                
                
                
                (238
                )
                
                
                58,486Depreciation
                
                
                2,686
                
                
                
                1,834
                
                
                
                114
                
                
                
                85
                
                
                
                -
                
                
                
                4,719Amortization
                
                
                1,406
                
                
                
                152
                
                
                
                -
                
                
                
                36
                
                
                
                -
                
                
                
                1,594Income
      tax (benefit) expense
                
                
                18,980
                
                
                
                684
                
                
                
                1,123
                
                
                
                -
                
                
                
                (69
                )
                
                
                20,718Capital
      expenditures
                
                
                1,534
                
                
                
                1,745
                
                
                
                305
                
                
                
                18
                
                
                
                -
                
                
                
                3,602Property
      & equipment,  net
                
                
                27,690
                
                
                
                8,733
                
                
                
                1,338
                
                
                
                393
                
                
                
                -
                
                
                
                38,154Total
      assets at period end
                
                
                475,158
                
                
                
                58,562
                
                
                
                20,117
                
                
                
                17,799
                
                
                
                (176,173
                )
                
                
                395,463


Net
export sales to unaffiliated customers (in thousands):




Three
      Months Ended
              
              
              Six
      Months EndedNovember
      30,
              
              
              November
      30,
              
              
              November
      30,
              
              
              November
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008United
      States
              
              $
              1,327
              
              
              $
              1,209
              
              
              $
              2,663
              
              
              $
              2,254Europe
              
              
              1,977
              
              
              
              1,167
              
              
              
              3,368
              
              
              
              2,815Canada
              
              
              576
              
              
              
              564
              
              
              
              1,167
              
              
              
              1,072Total
      net export sales
              
              $
              3,880
              
              
              $
              2,940
              
              
              $
              7,198
              
              
              $
              6,141






9.
            COMMITMENTS
      AND CONTINGENCIES




In June
2009, we announced that the FDA, in an administrative action based on a January
2009 inspection, issued a notice of intent to revoke our biologics license with
respect to our Reagent Red Blood Cells and Anti-E (Monoclonal) Blood Grouping
Reagent products. Under this administrative action, we have the opportunity to
demonstrate or achieve compliance before the FDA initiates revocation
proceedings or takes other action. The FDA did not order the recall of any of
our products or restrict us from selling these products. This administrative
action was a follow on to a warning letter that we had received in May 2008. We
had been working on a remediation plan, submitted after the warning letter, but
had failed to make adequate progress at the time of the FDA’s follow up January
2009 inspection. In response to the June 2009 administrative action, we
submitted a detailed remediation plan that outlines our actions and timelines to
correct the FDA’s noted deficiencies from the January 2009 inspection. The
Company’s detailed remediation plan is based on a quality project that began in
early calendar 2009.  The Company is targeting to complete the
FDA-remediation efforts associated with its quality project during its third
fiscal quarter of 2010.




13


In April
2009, Immucor, Inc. received a subpoena from the United States Department of
Justice, Antitrust Division (“DOJ”), requiring it to produce documents for the
period beginning September 1, 2000 through the present, pertaining to an
investigation of possible violations of the federal criminal antitrust laws in
the blood reagents industry. The Company has been cooperating with the DOJ and
intends to continue cooperating. At this time the Company cannot reasonably
assess the timing or outcome of the investigation or its effect, if any, on its
business.




In
October 2007, the Company reported that the Federal Trade Commission (“FTC”) was
investigating whether Immucor violated federal antitrust laws or engaged in
unfair methods of competition through three acquisitions made in the period from
1996 through 1999, and whether Immucor or others engaged in unfair methods of
competition by restricting price competition. The FTC letter requested that the
Company provide certain documents and information to the FTC concerning those
acquisitions and concerning its product pricing activities since
then.  In July 2008, the FTC formalized its document and information
requests into a Civil Investigative Demand (“CID”) and also required the Company
to provide certain additional information within the same general scope of its
previous requests. Most recently, the FTC has served a CID which requires that
it be provided with copies of documents provided to the DOJ in the DOJ’s
investigation described above.  The Company has been cooperating with
the FTC and intends to continue cooperating. At this time the Company cannot
reasonably assess the timing or outcome of the investigation or its effect, if
any, on its business.




Beginning
in May 2009, more than 30 lawsuits were filed in 10 different United
States District Courts against the Company, Ortho-Clinical Diagnostics, Inc. and
Johnson & Johnson Health Care Systems, Inc. alleging that the defendants
conspired to fix prices at which blood reagents are sold, asserting claims under
Section 1 of the Sherman Act, and seeking declaratory and injunctive relief,
treble damages, costs, and attorneys’ fees. All of these complaints make
substantially the same allegations and seek to certify a class of persons and
entities who purchased blood reagents from any of the defendants between January
1, 2000 and the present. Most of the complaints limit the proposed class to
persons and entities in the United States, but some do not contain that
limitation. In August 2009, these cases were ordered to be centralized
in the United States District Court for the Eastern District of
Pennsylvania.  That court now has before it motions to appoint interim
lead counsel for plaintiffs. There has been no discovery in any of these cases,
and no court has made a determination whether any of the plaintiffs’ claims have
merit or should be allowed to proceed as a class action. The Company intends to
vigorously defend against these cases. At this time the Company cannot
reasonably assess the timing or outcome of this litigation or its effect, if
any, on its business.




In August
2009, the City of Pontiac General Employees’ Retirement System filed a class
action lawsuit in the United States District Court for the Northern District of
Georgia against the Company and nine of its current and former directors and
officers, alleging that the defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The plaintiff seeks to certify a class of
purchasers of the Company’s Common Stock between October 19, 2005 and April 23,
2009.  The complaint alleges that the defendants failed to disclose
that the Company was operating in violation of United States antitrust laws. In
September 2009, Thomas Schlenker filed a similar class action lawsuit in the
United States District Court for the Eastern District of Pennsylvania against
the Company and ten of its current and former directors and officers, also
alleging that the defendants violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934.  This plaintiff also seeks to certify a class of
purchasers of the Company’s securities for the same class period.  The
Company has not yet responded to the complaints, but intends to vigorously
defend these lawsuits. At this time, the Company cannot reasonably assess the
timing or outcome of this litigation or its effect, if any, on its
business.




Other
than as set forth above or as previously reported in the Company’s Annual Report
on Form 10-K for the fiscal year ended May 31, 2009, as filed with the SEC on
July 24, 2009, we are not currently subject to any additional material legal
proceedings, nor, to our knowledge, is any material legal proceeding threatened
against us.  However, from time to time, we may become a party to
certain legal proceedings in the ordinary course of business.




14




10.
            RECENT
      ACCOUNTING PRONOUNCEMENTS




Adopted
by the Company in fiscal 2010





In June
2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards CodificationTM
and the Hierarchy of Generally Accepted Accounting Principles – A Replacement of
FASB Statement No. 162” (“SFAS 168”). SFAS 168 establishes the FASB Accounting Standards
CodificationTM(ASC) as the single source of authoritative U.S. generally accepted
accounting principles (U.S. GAAP) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. SFAS 168 and the Codification are effective for financial
statements issued for interim and annual periods ending after September 15,
2009, which corresponds to the Company’s second quarter of fiscal 2010. Upon
adoption, the Codification superseded all existing non-SEC accounting and
reporting standards. All other non-grandfathered non-SEC accounting literature
not included in the Codification became non-authoritative. Following SFAS 168,
the FASB will not issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts. Instead, the FASB will issue
Accounting Standards Updates (“ASU”), which will serve only to: (a) update the Codification;
(b) provide background
information about the guidance; and (c) provide the bases for
conclusions on the change(s) in the Codification. The adoption of SFAS 168
during the second quarter of fiscal 2010 did not have a material impact on the
Company’s consolidated financial statements.





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued an
update to ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). The
update provides guidance for using fair value to measure assets and liabilities,
and also responds to investors' requests for expanded information about the
extent to which companies measure assets and liabilities at fair value, the
information used to measure fair value and the effect of fair value measurements
on earnings.  This update applies whenever other standards require (or
permit) assets or liabilities to be measured at fair value. The standard does
not expand the use of fair value in any new circumstances. For financial assets
and liabilities, this update is effective for fiscal years beginning after
November 15, 2007. The Company adopted the provisions for the financial
assets and liabilities in fiscal 2009 and adoption did not have a material
impact on the Company’s results of operations or financial
position.  For nonfinancial assets and liabilities, this update is
effective for fiscal years beginning after November 15, 2008. The adoption
of provisions of the update to ASC 820 for nonfinancial assets and liabilities
during the first quarter of fiscal 2010 did not have a material impact on the
Company’s results of operations or financial
position.





In
December 2007, the FASB issued an update to ASC 805, “Business Combinations”
(“ASC 805”). This update will significantly change the financial accounting and
reporting of business combination transactions. The update also establishes
principles for how an acquirer recognizes and measures the identifiable assets
acquired, liabilities assumed, and any noncontrolling interest in the acquiree;
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase; and determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. The update to ASC 805 is effective for
acquisition dates on or after the beginning of an entity’s first year that
begins after December 15, 2008. The adoption of the update to ASC 805
during the first quarter of fiscal 2010 did not have a material impact on the
Company’s consolidated financial statements.





In
December 2007, the FASB issued an update to ASC 810, “Consolidation” (“ASC
810”). This update establishes accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. This update is effective for fiscal years beginning on or after
December 15, 2008. The adoption of the update to ASC 810 during the first
quarter of fiscal 2010 did not have a material impact on the Company’s
consolidated financial statements.





In
April 2008, the FASB issued an update to ASC 350, “Intangibles – Goodwill
and Other” (“ASC 350”), which amends the factors an entity must consider when
developing renewal or extension assumptions used in determining the useful life
of a recognized intangible asset. It also requires entities to provide certain
disclosures about its assumptions. This update is effective for financial
statements issued for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years. The adoption of the update to ASC
350 during the first quarter of fiscal 2010 did not have a material impact
on the Company’s consolidated financial statements.





15


In June
2008, the FASB issued an update to ASC 260, “Earnings Per Share”, (“ASC
260”).  This update states that unvested share-based payment awards
that contain rights to receive nonforfeitable dividends (whether paid or unpaid)
are participating securities, and should be included in the two-class method of
computing EPS. The update is effective for fiscal years beginning after December
15, 2008, and interim periods within those years. The adoption of ASC
260-40-45-61A during the first quarter of fiscal 2010 did not have a material
impact on the Company’s consolidated financial statements.





In
April 2009, the FASB issued an update to ASC 825, “Financial Instruments”
(“ASC 825”). This update requires disclosures about fair value of financial
instruments not measured on the balance sheet at fair value in interim financial
statements as well as in annual financial statements. Prior to this update, fair
values for these assets and liabilities were only disclosed annually. This
update requires all entities to disclose the methods and significant assumptions
used to estimate the fair value of financial instruments. This update is
effective for interim periods ending after June 15, 2009. Disclosure is not
required for earlier periods presented for comparative purposes at initial
adoption. In periods after initial adoption, comparative disclosures are
required only for periods ending after initial adoption. The adoption of ASC
825-10-65-1 during the first quarter of fiscal 2010 did not have a material
impact on the Company’s consolidated financial statements.





In May
2009, the FASB established ASC 855, “Subsequent Events” (“ASC
855”).  ASC 855 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued.  The effective date of ASC 855 is
interim or annual financial periods ending after June 15, 2009.   This
codification topic does not apply to subsequent events or transactions that are
within the scope of other applicable generally accepted accounting principles
that provide different guidance on the accounting treatment for subsequent
events or transactions. ASC 855 would apply to both interim financial statements
and annual financial statements and should not result in significant changes in
the subsequent events that are reported. ASC 855 introduces the concept of
financial statements being available to be issued. It requires the disclosure of
the date through which a Company has evaluated subsequent events and the basis
for that date, whether that represents the date the financial statements were
issued or were available to be issued. ASC 855 should alert all users of
financial statements that an entity has not evaluated subsequent events after
that date in the set of financial statements being presented. The adoption of
ASC 855 during the first quarter of fiscal 2010 did not have a material impact
on the Company’s consolidated financial statements.





In August
2009, the FASB issued ASU 2009-05, “Measuring Liabilities at Fair Value,” which
is an amendment of ASC 820-10, “Fair Value Measurements and Disclosures:
Overall.” ASU 2009-05 provides clarification for circumstances where a quoted
price in an active market for the identical liability is not
available.  In that situation, entities are required to measure fair
value in one or more of the following techniques:


1)
      A valuation technique that uses


a.The
      quoted price of the identical liability when traded as an
      asset


b.Quoted
      prices for similar liabilities or similar liabilities when traded as an
      asset


2)Another
      valuation technique that is consistent with the principles of ASC 820,
      such as an income approach or a market
approach.


ASU
2009-05 also clarifies that a reporting entity is not required to adjust the
fair value of a liability to include inputs relating to the existence of
transfer restrictions on that liability.  The provisions of this
update are effective for the first reporting period (including interim periods)
beginning after issuance.  The adoptions of the provisions of this
update to ASC 820 during the second quarter of fiscal 2010 did not have a
material impact on the Company’s consolidated financial
statements.





Not
yet adopted by the Company





In June
2009, the FASB issued an update to ASC 860, “Transfers and Servicing” (“ASC
860”). This update will require more information about transfers of financial
assets, including securitization transactions, and where entities have
continuing exposure to the risks related to transferred financial assets. It
eliminates the concept of a “qualifying special-purpose entity,” changes the
requirements for derecognizing financial assets, and requires additional
disclosures. It also enhances information reported to users of financial
statements by providing greater transparency about transfers of financial assets
and an entity’s continuing involvement in transferred financial
assets.  This update will be effective at the start of a reporting
entity’s first fiscal year beginning after November 15, 2009, which corresponds
to the Company’s first quarter of fiscal 2011. Early application is not
permitted. The Company is currently evaluating the impact of adoption of
this update to ASC 860 on its financial statements.





16


In June
2009, the FASB issued an update to ASC 810, “Consolidation” (“ASC 810”). This
update changes how a reporting entity determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated. The determination of whether a reporting entity
is required to consolidate another entity is based on, among other things, the
other entity’s purpose and design and the reporting entity’s ability to direct
the activities of the other entity that most significantly impact the other
entity’s economic performance. This update will require a reporting entity
to provide additional disclosures about its involvement with variable interest
entities and any significant changes in risk exposure due to that involvement. A
reporting entity will be required to disclose how its involvement with a
variable interest entity affects the reporting entity’s financial statements.
The update will be effective at the start of a reporting entity’s first fiscal
year beginning after November 15, 2009, which corresponds to the Company’s first
quarter of fiscal 2011. Early application is not permitted. The Company is
currently evaluating the impact of adoption of this update of ASC 810 on its
financial statements.





In
October 2009, the FASB issued ASU 2009-13, “Multiple Deliverables Revenue
Arrangements,” which is an amendment of ASC 605-25, “Revenue Recognition:
Multiple Element Arrangements.”  This update addresses the accounting
for multiple-deliverable arrangements to allow the vendor to account for
deliverables separately instead of as one combined unit by amending the criteria
for separating consideration in multiple-deliverable
arrangements.  This guidance establishes a selling price hierarchy for
determining the selling price of a deliverable, which is based on a)
vendor-specific objective evidence (VSOE), b) third-party evidence or c) best
estimate of selling price.  The residual method of allocation has been
eliminated and arrangement consideration is now required to be allocated to all
deliverables at the inception of the arrangement using the selling price
method.  Additionally, expanded disclosures will be required relating
to multiple deliverable revenue arrangements.  This update will be
effective for fiscal years beginning on or after June 15, 2010, which
corresponds to the Company’s first quarter of fiscal 2012.  Early
adoption is permitted.  The Company is currently evaluating the impact
of the adoption of this update to ASC 605-25 on its financial statements.





In
December 2009, the FASB issued ASU 2009-16, “Accounting for Transfers of
Financial Assets,” which is an amendment of ASC 860, “Transfers and
Servicing.”  This update will require more information about the
transfer of financial assets.  More specifically, ASU 2009-16
eliminates the concept of a “special purpose entity”, changes the requirements
for derecognizing financial assets, and enhances the information reported to
users of financial statements.  This update will be effective for
fiscal years beginning on or after November 15, 2009, which corresponds to the
Company’s first quarter of fiscal 2011.  Early application is not
permitted.  The Company is currently evaluating the impact of the
adoption of this update to ASC 860 on its financial statements.




11.
            SUBSEQUENT
      EVENTS




The
Company has evaluated its November 30, 2009
consolidated financial statements for subsequent events through January 7, 2010,
the date the consolidated financial statements were issued and filed with the
SEC. The Company is not aware of any subsequent events which would require
recognition or disclosure in the consolidated condensed financial
statements.





ITEM
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations





From time to time the Company makes
statements or projections about future financial results or economic
performance, or statements about plans and objectives for future operations,
which are referred to as “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 and the safe harbor provisions
set forth in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements may be identified by
words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,”
“projects,” “will,” “should” and other words of similar meaning.  We
sometimes use forward-looking statements in discussions of our business, for
example, when discussing future operations, financial performance, product
development and new product launches, FDA and other regulatory applications and
approvals, market position and expenditures.  Some of the statements
in this report are such forward-looking statements.  Factors that
could cause actual results to differ materially from those expressed in any
forward-looking statement made by, or on behalf of, the Company include the
following, some of which are described in greater detail below: the outcome and
costs associated with the Company’s Quality Process Improvement Project; the
outcome of the administrative action (“notice of intent to revoke our biological
license”) received from the Food and Drug Administration (“FDA”); customer
reaction to the FDA action and the subsequent impact on the business; lower than
expected demand for the Company’s instruments; the decision of customers to
defer capital spending; the unexpected change in the mix of instruments being
purchased instead of acquired through other means, which could significantly
change costs recognized in the period; the failure of customers to efficiently
integrate the Company’s instruments into their blood banking operations;
increased competition in the sale of instruments and reagents, particularly in
the United States; unanticipated operational problems that result in
non-compliance with FDA regulations; the failure to effectively integrate
BioArray operations into the Company’s overall operations; product development
obstacles including obstacles related to the development of the Galileo Neo and
the next generation automated instrument for the molecular immunohematology
products; regulatory obstacles including obstacles in securing regulatory
approval of the molecular immunohematology products; the inability to hire and
retain, and the unexpected loss of, key managers; changes in interest rates;
fluctuations in foreign currency conversion rates; the strengthening of the U.S.
Dollar versus any of the functional currencies in which the Company operates and
its adverse impact on reported results; the inability of the Company’s Japanese
and French subsidiaries as well as our molecular immunohematology operations to
attain expected revenue, gross margin and net income levels; the outcome of any
legal claims or regulatory investigations known or unknown, including the
ongoing investigations by the Department of Justice and the Federal Trade
Commission, and the related customer and shareholder lawsuits; the Company’s
inability to protect its intellectual property, particularly as to the molecular
immunohematology products, or its infringement of the intellectual property of
others; lower than expected market acceptance of the molecular immunohematology
products; the unexpected application of different accounting rules; general
economic conditions; and adverse developments with respect to the operation or
performance of the Company, its products and its affiliates or the market price
of its common stock. Investors are cautioned not to place undue reliance on any
forward-looking statements. The Company cautions that historical results should
not be relied upon as indications of future performance.  The Company
assumes no obligation to update any forward-looking
statements.  Additional information concerning
these and other factors which could cause differences between forward-looking
statements and future actual results is discussed under the heading “Risk
Factors” in the Company’s Annual Report on Form 10-K for the year ended
May 31, 2009 as filed with the SEC on July 24, 2009 as such risk factors
may be revised or expanded in this report.





17





Overview




Our
Business




We
develop, manufacture, and sell a complete line of reagents and automated systems
used primarily by hospitals, clinical laboratories and blood banks in tests
performed to detect and identify certain properties of human blood prior to
blood transfusions. We have manufacturing facilities in the United States and
Canada. We sell our products from these facilities and through our affiliates in
Western Europe and Japanas well as through
third-party distributors in other markets.





We
operate in a highly regulated industry and are subject to continuing compliance
with multiple country-specific statutes, regulations and standards. For example,
in the U.S. the Food and Drug Administration (“FDA”) regulates all aspects of
the blood banking industry, including the marketing of reagents and instruments
used to detect and identify blood properties.





Our
strategy is to drive automation in the blood bank with the goal of improving the
blood bank’s operations as well as patient safety. We have introduced several
instruments in the past, and we continue to focus on developing new instruments
and improving our existing instruments. We received FDA clearance in June 2007
to market our Galileo Echo® (“Echo”) instrument. The Echo is a compact bench
top, fully-automated walk-away instrument that meets the needs of the small- to
medium-sized hospital market as well as integrated delivery networks that want
to standardize the operations of their blood banks. Like our high volume
Galileo® instrument, Echo uses Capture® technology, our proprietary reagents,
and offers an extensive test menu and significant labor reduction while
increasing productivity and patient safety.





In August
2008, we invested in what we believe will be the future of the blood bank –
molecular immunohematology – with our acquisition of privately-held BioArray
Solutions (“BioArray”). BioArray pioneered the development of DNA typing of
blood for transfusion. With the goal of improving transfusion medicine, we
believe that molecular immunohematology will revolutionize blood bank
operations. In many countries, blood pre-transfusion testing is limited to the
prevention of transfusion reactions and not for the prevention of
alloimmunization, which occurs when antigens foreign to the patient are
inadvertently introduced into the patient’s blood system through transfusions.
If alloimmunization occurs, the patient develops new antibodies in response to
the foreign antigens, thereby complicating future transfusions. By using
multiplex, cost-effective molecular testing, we plan to introduce a system that
allows testing to prevent alloimmunization for better patient care. We are
currently working on the next generation instrument to allow for the further
commercialization of our molecular immunohematology technology. Our current
timeline is to have a research use only instrument available in the first half
of calendar 2011.





18


Recent
Developments





Two
significant recent developments are the acquisition of BioArray and the
development of the next generation automated instrument to allow the full scale
commercialization of our acquired molecular immunohematology offering, which are
discussed above under “Our Business.” The following discusses other recent
developments in our business.





Continued market
penetration of the Echo instrument–We launched our latest instrument, the
Echo, in the first quarter of fiscal 2008. The Echo features STAT functionality,
exceptional mean time between failures and what we believe is the fastest
turnaround time in the industry. The Echo is targeted at the small- to
medium-sized hospital market, the largest segment of our market, numbering
approximately 6,000 worldwide. As of November 30, 2009, we had received orders
for a total of 720 Echo instruments worldwide. We believe continued market
penetration of Echo will be a growth driver for the Company.




Upcoming launch of Galileo NeoTM –We are currently developing a new version of the Galileo, named the
Galileo Neo, which will be our fourth generation automated instrument. We
believe the original Galileo, which was launched in Western Europe in 2002 and
in the U.S. in 2004, is approaching its natural replacement cycle of 5-7 years.
Galileo Neo, like the original Galileo, will be targeted at high volume
customers: large hospitals, donor centers and reference laboratories. We expect
the Galileo Neo will have faster turnaround times and a longer mean time between
failure than the current Galileo as well as new features such as STAT
functionality. We expect to launch the Galileo Neo during the first calendar
quarter of 2010.





FDA Administrative Action –In June 2009, we announced that the FDA, in an administrative action
based on a January 2009 inspection, issued a notice of intent to revoke our
biologics license with respect to our Reagent Red Blood Cells and Anti-E
(Monoclonal) Blood Grouping Reagent products. Under this administrative action,
we have the opportunity to demonstrate or achieve compliance before the FDA
initiates revocation proceedings or takes other action. The FDA did not order
the recall of any of our products or restrict us from selling these products.
This administrative action was a follow on to a warning letter that we had
received in May 2008. We had been working on a remediation plan, submitted after
the warning letter, but had failed to make adequate progress at the time of the
FDA’s follow up January 2009 inspection. In early calendar 2009 (during our
fiscal third quarter), we formalized efforts to improve our quality systems
through the Quality Process Improvement Project, which is discussed in further
detail below. In response to the June 2009 administrative action, we submitted a
detailed remediation plan that outlines our actions and timelines to correct the
FDA’s noted deficiencies from the January 2009 inspection. The Quality Process
Improvement Project served as the basis for the detailed remediation plan. We
continue to implement the Project and believe that, in addition to addressing
the deficiencies noted by the FDA, the Project remediation efforts will provide
the foundation for the establishment of a world-class quality system. We are
targeting to complete the Project during our third fiscal quarter of
2010.





Quality Process Improvement Project– During our third fiscal quarter of 2009, we formalized our efforts to
improve the processes and procedures of our quality department by establishing
the Quality Process Improvement Project. The Project expanded the role of
consultants hired in April 2008. During fiscal 2009, we spent approximately $2.4
million on the Project, which was primarily reflected in cost of goods sold.
During our second fiscal quarter of 2010, we spent approximately $1.8 million on
the Project and have incurred approximately $4.1 million on a year-to-date basis
in fiscal 2010. We expect to incur a total of $6 million to $7 million of
Project-related expenses in fiscal 2010. The Project expenses primarily
represent the cost of external consultants who are assisting us with the
Project. We are targeting to complete the FDA-remediation efforts associated
with the Project during our third fiscal quarter of 2010.  The Project
remediation efforts lay the foundation for the longer term goal of the Project,
which is to build a world-class quality system.  We will continue to
work to ensure we have a world-class quality system for the
future.  Project costs after completion of the remediation efforts are
not expected to be material.





19


The U.S. Department of Justice
Subpoena – In April 2009, we announced that we had received a subpoena
from the U.S. Department of Justice, Antitrust Division related to an
investigation of possible violations of the federal criminal antitrust laws in
the blood reagents industry. The subpoena requires us to produce documents for
the period beginning September 1, 2000 through the present. We are cooperating
fully with the Department of Justice.





Lawsuits – Since May 2009,
more than 30 antitrust lawsuits have been filed against Immucor, Ortho-Clinical
Diagnostics, Inc. and Johnson & Johnson Health Care Systems, Inc. alleging
that those companies conspired to fix blood reagent prices. These cases have
been centralized in one jurisdiction. Additionally, in August and September
2009, two lawsuits were filed against Immucor alleging violations of the federal
securities laws. These lawsuits are in the preliminary stages.  See
Part II, Item 1. Legal Proceedings below.





Performance


Three
      Months Ended
              
              
              
              
              
              Six
      Months EndedNovember
      30,
              
              November
      30,
              
              Change
              
              November
      30,
              
              November
      30,
              
              Change2009
              
              2008
              
              Amount
              
              %
              
              2009
              
              2008
              
              Amount
              
              %($
      in thousands)
              
              
              
              
              
              ($
      in thousands)Net
      sales
              
              $
              82,570
              
              $
              73,021
              
              $
              9,549
              
              
              13%
              
              $
              165,641
              
              $
              146,197
              
              $
              19,444
              
              
              13%Gross
      margin
              
              
              58,139
              
              
              53,558
              
              
              4,581
              
              
              9%
              
              
              117,828
              
              
              106,983
              
              
              10,845
              
              
              10%Gross
      margin percentage
              
              
              70.4%
              
              
              73.3%
              
              
              
              
              
              
              
              
              71.1%
              
              
              73.2%Operating
      expenses
              
              
              27,477
              
              
              25,696
              
              
              1,781
              
              
              7%
              
              
              53,824
              
              
              48,497
              
              
              5,327
              
              
              11%Income
      from operations
              
              
              30,662
              
              
              27,862
              
              
              2,800
              
              
              10%
              
              
              64,004
              
              
              58,486
              
              
              5,518
              
              
              9%Non-operating
      income
              
              
              38
              
              
              (721
              )
              
              759
              
              
              -105%
              
              
              253
              
              
              (473
              )
              
              726
              
              
              -153%Income
      before income tax
              
              
              30,700
              
              
              27,141
              
              
              3,559
              
              
              13%
              
              
              64,257
              
              
              58,013
              
              
              6,244
              
              
              11%Provision
      for income tax
              
              
              10,998
              
              
              9,803
              
              
              1,195
              
              
              12%
              
              
              23,222
              
              
              20,718
              
              
              2,504
              
              
              12%Net
      income
              
              $
              19,702
              
              $
              17,338
              
              $
              2,364
              
              
              14%
              
              $
              41,035
              
              $
              37,295
              
              $
              3,740
              
              
              10%Earnings
      per share:Per
      common share - basic
              
              $
              0.28
              
              $
              0.25
              
              $
              0.03
              
              
              12%
              
              $
              0.58
              
              $
              0.53
              
              $
              0.05
              
              
              9%Per
      common share - diluted
              
              $
              0.28
              
              $
              0.24
              
              $
              0.04
              
              
              17%
              
              $
              0.58
              
              $
              0.52
              
              $
              0.06
              
              
              12%







During
the three months ended November 30, 2009, revenue increased by approximately
$9.5 million or approximately 13% compared with revenue in the prior year
quarter. This increase was primarily attributable to approximately $5.2 million
from price contributions, which included incremental revenue from both
contractual and discretionary sources, and approximately $2.4 million from
volume contributions, which included incremental revenue from instrument
placements. Additionally, revenue was favorably impacted by approximately $1.9
million from fluctuations in foreign
currency exchange rates.





During
the six months ended November 30, 2009, revenue increased by approximately $19.4
million or approximately 13% compared with revenue in the prior year. This
increase was primarily attributable to approximately $11.6 million from price
contributions, which included incremental revenue from both contractual and
discretionary sources, and approximately $7.6 million from volume contributions,
which included incremental revenue from instrument placements. Additionally,
revenue was favorably impacted by approximately $0.2 million from fluctuations in foreign
currency exchange rates.





For the
second quarter of fiscal 2010, our consolidated gross margin decreased to 70.4%
from 73.3% achieved in the second quarter of fiscal 2009, primarily due to
approximately $1.8 million of costs related to our Quality Process Improvement
Project, which was reflected in cost of sales. Operating expenses increased
approximately 7% over the prior year quarter. The increase was primarily
attributable to increased research and development expenses related to the next
generation automated instrument for molecular immunohematology and increased
legal expenses. Net income increased approximately 14% in the second quarter of
fiscal 2010 over the prior year quarter.





For the
first six months of fiscal 2010, our consolidated gross margin decreased to
71.1% from 73.2% achieved in the first six months of fiscal 2009, primarily due
to approximately $4.1 million of costs related to our Quality Process
Improvement Project, which was reflected in cost of sales. Operating expenses
increased approximately 11% over the prior year period primarily due to our
acquisition of BioArray. Net income increased approximately 10% in the
first six months of fiscal 2010 over the prior year period.





20


As of
November 30, 2009, we had received orders for a total of 720 Echo instruments
worldwide (an increase of 77 instruments in the second quarter of fiscal 2010),
including 155 in Europe, including distributors, 548 in the U.S. and Canada and
17 in Japan, and approximately 498 of these Echo instruments were generating
reagent revenues at the expected annualized run rate.For Galileo, as of
November 30, 2009, we had received orders for a total of 678 Galileo instruments
worldwide (an increase of 27 instruments in the second quarter of fiscal 2010),
including 402 in Europe, including distributors, 269 in the U.S. and Canada and
7 in Japan, and approximately 634 of these Galileo instruments were generating
reagent revenues at the expected annualized run rate.





Results
of Operations





Net
Sales






Three
      Months Ended
              
              
              
              
              
              Six
      Months EndedNovember
      30,
              
              November
      30,
              
              Change
              
              November
      30,
              
              November
      30,
              
              Change2009
              
              2008
              
              Amount
              
              %
              
              2009
              
              2008
              
              Amount
              
              %($
      in thousands)
              
              
              
              
              
              ($
      in thousands)Traditional
      reagents
              
              $
              51,361
              
              $
              47,229
              
              $
              4,132
              
              
              9%
              
              $
              106,080
              
              $
              96,502
              
              $
              9,578
              
              
              10%Capture
      products
              
              
              20,005
              
              
              16,524
              
              
              3,481
              
              
              21%
              
              
              38,308
              
              
              31,697
              
              
              6,611
              
              
              21%Instruments
              
              
              10,025
              
              
              8,609
              
              
              1,416
              
              
              16%
              
              
              19,317
              
              
              17,188
              
              
              2,129
              
              
              12%Molecular
      immunohematology
              
              
              1,179
              
              
              659
              
              
              520
              
              
              79%
              
              
              1,936
              
              
              810
              
              
              1,126
              
              
              139%$
              82,570
              
              $
              73,021
              
              $
              9,549
              
              
              13%
              
              $
              165,641
              
              $
              146,197
              
              $
              19,444
              
              
              13%





Traditional
reagent revenue increased by approximately 9% and 10% during the three and six
months ended November 30, 2009, respectively, compared with revenue earned in
the corresponding periods of fiscal 2009. Revenue increased in the current year
periods primarily due to price contributions, which included incremental revenue
from both contractual and discretionary sources. Traditional reagent sales,
which accounted for more than 60% of total revenue in the current year periods,
have historically been a significant portion of our revenue. We expect our
revenue mix to change over time as we place more instruments in the market,
which results in increased sales of our Capture reagents.





Capture
revenue increased by approximately 21% in both the three and six months ended
November 30, 2009 compared with revenue earned in the corresponding periods of
fiscal 2009. Revenue increased in the current year periods primarily due to
increased volume. Sales of Capture reagents are largely dependent on the number
of installed instruments requiring the use of our proprietary Capture
technology. As we continue to place more instruments in the market, we expect
revenue from Capture reagents to continue to increase.





Revenue
from instruments increased by approximately 16% and 12% during the three and six
months ended November 30, 2009, respectively, compared with revenue earned in
the corresponding periods of fiscal 2009. Revenue increased in the current year
periods primarily due to increased instrument placements. Historically, revenue from
instrument sales in the United States has been recognized over the life of the
underlying reagent contract when the reagent contract includes aprice
guarantee. We continued to have a significant proportion of instruments that
were acquired as rentals in the current year quarter, which resulted in revenue
being recognized over the term of the contract as earned, versus deferred and
amortized as in the case of the instrument being sold.In the second fiscal
quarter of 2010, approximately $2.1 million of deferred revenue was recognized
from previously placed instruments compared to $2.8 million recognized in the
prior year quarter. We deferred approximately $1.0 million of instrument
revenues related to instrument placements in the current year quarter, compared
to $2.6 million in the prior year quarter.In the first
six months of fiscal 2010, approximately $4.4 million of deferred revenue was
recognized from previously placed instruments compared to $5.7 million
recognized in the prior year period. We deferred approximately $1.8 million of
instrument revenues related to instrument placements in the current year period,
compared to $4.7 million in the prior year period. As of November 30, 2009 and
2008, deferred instrument and service revenues totaled approximately $19.6
million and $23.0 million, respectively.




Molecular
immunohematology revenue was $1.2 million in the second quarter of 2010 compared
with $0.7 million in the prior year quarter. The revenue increase of $0.5
million is primarily due the introduction of our molecular offering to markets
outside the U.S. For the first six months of fiscal 2010, molecular
immunohematology revenue was $1.9 million compared with $0.8 million in the
prior year period. Our molecular immunohematology products are a result of our
August 4, 2008 BioArray acquisition.




21





Gross
Margins (1)






Three
      Months EndedNovember
      30,
              
              
              November
      30,2009
              
              
              2008
              
              
              ChangeAmount
              
              
              Margin %
              
              Amount
              
              
              Margin %
              
              Amount(in
      '000)
              
              
              
              
              
              (in
      '000)
              
              
              
              
              
              (in
      '000)Traditional
      reagents (1)
              
              $
              39,434
              
              
              
              76.8%
              
              
              $
              38,169
              
              
              
              80.8%
              
              
              $
              1,265Capture
      products (1)
              
              
              16,320
              
              
              
              81.6%
              
              
              
              13,987
              
              
              
              84.6%
              
              
              
              2,333Instruments
      (1)
              
              
              2,203
              
              
              
              22.0%
              
              
              
              1,118
              
              
              
              13.0%
              
              
              
              1,085Molecular
      immunohematology (1)
              
              
              182
              
              
              
              15.4%
              
              
              
              284
              
              
              
              43.1%
              
              
              
              (102
              )$
              58,139
              
              
              
              70.4%
              
              
              $
              53,558
              
              
              
              73.3%
              
              
              $
              4,581






Six
      Months EndedNovember
      30,
                
                
                November
      30,2009
                
                
                2008
                
                
                ChangeAmount
                
                
                Margin %
                
                Amount
                
                
                Margin %
                
                Amount(in
      '000)
                
                
                
                
                
                (in
      '000)
                
                
                
                
                
                (in
      '000)Traditional
      reagents (1)
                
                $
                81,080
                
                
                
                76.4%
                
                
                $
                76,939
                
                
                
                79.7%
                
                
                $
                4,141Capture
      products (1)
                
                
                31,565
                
                
                
                82.4%
                
                
                
                27,144
                
                
                
                85.6%
                
                
                
                4,421Instruments
      (1)
                
                
                5,180
                
                
                
                26.8%
                
                
                
                2,607
                
                
                
                15.2%
                
                
                
                2,573Molecular
      immunohematology (1)
                
                
                3
                
                
                
                0.2%
                
                
                
                293
                
                
                
                36.2%
                
                
                
                (290
                )$
                117,828
                
                
                
                71.1%
                
                
                $
                106,983
                
                
                
                73.2%
                
                
                $
                10,845


(1)  The
determination of gross margin is exclusive of amortization expense which is
presented separately as an operating expense in the income
statement.


For the
three months ended November 30, 2009, gross margins on traditional reagents
decreased to 76.8% from 80.8% in the prior year quarter, primarily due to
approximately $1.8 million in costs related to our Quality Process Improvement
Project. These costs were reflected in traditional reagent cost of
sales.





On a
year-to-date basis for the six months ended November 30, 2009, gross margins on
traditional reagents decreased to 76.4% from 79.7% in the prior year period
primarily due to approximately $4.1 million in costs related to our Quality
Process Improvement Project.





For the
three months ended November 30, 2009, Capture product gross margins decreased to
81.6% from 84.6% in the prior year quarter. On a year-to-date basis in fiscal
2010, Capture product gross margins decreased to 82.4% from 85.6% in the prior
year period. Gross margin decreased in both the three-month and six-month
periods primarily due to manufacturing variances.





For the
three and six months ended November 30, 2009, gross margins on instruments were
22.0% and 26.8%, respectively, compared with 13.0% and 15.2%, respectively, for
the corresponding periods of fiscal 2009. The gross margin improvement in both
current year periods was primarily due to sales mix. In the current year
periods, more instruments were rented (versus sold) as compared to the prior
year periods. Where sales contracts have reagent price guarantee clauses (which
our automation contracts typically do), instrument costs are expensed when the
sale is made, but the related instrument revenue is deferred and recorded as
income over the term of the contract. When an instrument is rented, revenue and
expenses for the transaction are recognized evenly over the life of the
contract. Additionally, current year margins benefited from the recognition of
revenue deferred from prior periods with approximately $2.1 million of deferred
revenue recognized in the second quarter of fiscal 2010 and approximately $4.4
million of deferred revenue recognized on a year-to-date basis in fiscal
2010.





22





Operating
Expenses





Three
      Months Ended
                
                
                
                
                
                Six
      Months EndedNovember
      30,
                
                November
      30,
                
                Change
                
                November
      30,
                
                November
      30,
                
                Change2009
                
                2008
      (1)
                
                Amount
                
                %
                
                2009
                
                2008
      (1)
                
                Amount
                
                %($
      in thousands)
                
                
                
                
                
                ($
      in thousands)Research
      and development
                
                $
                3,898
                
                $
                2,896
                
                $
                1,002
                
                
                35%
                
                $
                7,721
                
                $
                4,777
                
                $
                2,944
                
                
                62%Selling
      and marketing
                
                
                9,765
                
                
                10,538
                
                
                (773
                )
                
                -7%
                
                
                19,229
                
                
                19,732
                
                
                (503
                )
                
                -3%Distribution
                
                
                3,721
                
                
                3,549
                
                
                172
                
                
                5%
                
                
                7,226
                
                
                7,017
                
                
                209
                
                
                3%General
      and administrative
                
                
                9,020
                
                
                7,642
                
                
                1,378
                
                
                18%
                
                
                17,508
                
                
                15,375
                
                
                2,133
                
                
                14%Amortization
      expense
                
                
                1,073
                
                
                1,071
                
                
                2
                
                
                0%
                
                
                2,140
                
                
                1,596
                
                
                544
                
                
                34%Total
      operating expenses
                
                $
                27,477
                
                $
                25,696
                
                $
                1,781
                
                
                7%
                
                $
                53,824
                
                $
                48,497
                
                $
                5,327
                
                
                11%
  (1)  Certain
      prior year operating expenses have been reclassified to conform with
      current year presentation.





Research
and development expenses for the three and six months ended November 30, 2009
increased by approximately $1.0 million and $2.9 million, respectively, compared
with the prior year periods. The current year quarter increase is primarily
attributable to expenses related to the next generation
automated instrument for molecular immunohematology. The year-to-date increase
is attributable to expenses related to the next generation molecular
immunohematology instrument as well as recognizing a full six months of BioArray
expenses, which wasacquired on August 4, 2008.





Selling
and marketing expenses for the three and six months ended November 30, 2009
decreased approximately $0.8 million and $0.5 million, respectively, compared
with the prior year periods primarily due to lower marketing expenses and lower
sales commissions.





Distribution
expenses for the three and six months ended November 30, 2009 were generally in
line with the prior year periods.





General
and administrative expenses for the three and six months ended November 30, 2009
increased by approximately $1.4 million and $2.1 million, respectively, compared
with the prior year periods. The current year quarter increase was primarily due
to increased legal fees while the year-to-date increase was primarily due to
increased legal fees and the addition of BioArray.  Legal expenses
related to the DOJ investigation and the related lawsuits were approximately
$1.2 million in the second quarter of fiscal 2010 and approximately $2.0 million
on a year-to-date basis in fiscal 2010.





Amortization
expense for the second fiscal quarter of 2010 was generally in line with the
prior year quarter. Amortization expense on a year-to-date basis in fiscal 2010
increased by approximately $0.5 million compared with the prior year period
primarily due to recognizing a full six months of amortization of finite-lived
intangibles that were recorded upon the acquisition of BioArray.





Non-Operating
Income




Three
      Months Ended
              
              
              
              
              
              Six
      Months EndedNovember
      30,
              
              November
      30,
              
              Change
              
              
              
              November
      30,
              
              November
      30,
              
              Change2009
              
              2008
              
              Amount
              
              
              
              2009
              
              2008
              
              Amount($
      in thousands)
              
              
              
              
              
              ($
      in thousands)Non-operating
      income (expense)
              
              $
              38
              
              $
              (721
              )
              $
              759
              
              
              -105%
              
              $
              253
              
              $
              (473
              )
              $
              726




Non-operating
income increased by approximately $0.8 million and $0.7 million, respectively
for the three and six months ended November 30, 2009 compared with the prior
year periods primarily due to prior year foreign exchange losses that did not
recur in the current year offset by lower interest income due to lower interest
rates.





23




Income
Taxes




The
provision for income taxes increased $1.2
million for the three months ended November 30, 2009 and increased $2.5
million on a year-to-date basis compared with the corresponding period in fiscal
2009 primarily due to changes in pre-tax
income. The effective income tax rate was 35.9% and 36.2% in
the three-month and six-month periods ended November 30, 2009, respectively,
compared with 36.1% and 35.7% in
the three-month and six-month periods ended November 30, 2008,
respectively.




As a
result of using compensation cost deductions arising from the exercise of
nonqualified employee stock options for federal and state income tax purposes,
we realized excess income tax benefits of approximately $0.2 million and $2.9
million in the six-month periods ended November 30, 2009 and 2008,
respectively.  The exercises that contribute to the tax benefit are
exercises of options that were granted prior to the adoption of ASC 718, which
required compensation expense arising from share-based payments to be recognized
in the income statement for financial reporting purposes.  Therefore,
as required by U.S. generally accepted accounting principles, these income tax
benefits are recognized in our financial statements as additions to additional
paid-in capital rather than as reductions of the respective income tax
provisions in the consolidated financial statements because the related
compensation deductions were not recognized as compensation expense for
financial reporting purposes. Our income tax liability is reduced by these
amounts.





Liquidity
and Capital Resources




For
      the Six Months EndedNovember
      30, 2009
              
              
              November
      30, 2008(in
      thousands)Net
      cash provided by operating activities
              
              $
              34,146
              
              
              $
              32,308Net
      cash used in investing activities
              
              
              (4,484
              )
              
              
              (112,139
              )Net
      cash used in financing activities
              
              
              (11,351
              )
              
              
              (541
              )Effect
      of exchange rate changes on cash and cash equivalents
              
              
              1,294
              
              
              
              (2,382
              )Increase
      (decrease) in cash and cash equivalents
              
              $
              19,605
              
              
              $
              (82,754
              )





Our cash
and cash equivalents were $156.1 million at November 30, 2009,
as compared with $136.5 million at May 31, 2009.  The increase in our
cash position primarily resulted from operating cash flow in the first half of
fiscal 2010.





Operating Activities – Net
cash generated by operating activities was $34.1 million for the six months
ended November 30, 2009, compared with $32.3 million generated in the six months
ended November 30, 2008. The year-over-year increase was primarily due to
increased profitability.





Investing Activities – For
the first six months of fiscal 2010, $4.5 million of net cash was used in
investing activities compared with $112.1 million in the corresponding period of
the prior year. During fiscal 2009, we paid $108.5 million for the acquisitions
of BioArray and our U.K. distributor. For the purchase of property and
equipment, we spent $4.5 million in the current year period compared with $3.6
million spent in the prior year period.





Financing Activities –Net
cash used in financing activities was $11.4 million during the first six months
of fiscal 2010, compared with $0.5 million in the corresponding period of the
prior year. For the repurchase of shares of our common stock, we spent $11.6
million in the current year compared with $4.7 million spent in the
corresponding period of the prior fiscal year. During the current year period,
we had a cash outflow of $0.2 million for payment of withholding taxes in
compliance with the statutory tax withholding requirements on exercise of
options and vesting of restricted shares in exchange for surrender of the
Company’s shares of equal value, compared with a cash outflow of $1.0 million in
the prior year quarter. The value of these reacquired shares is disclosed as
‘Repurchase of common stock’ under financing activities in the condensed
consolidated statement of cash flows. During the first six months of fiscal
2010, we received $0.2 million cash from the exercise of employee stock options
compared with $2.5 million in the same period of the prior year. We received
$0.2 million and $2.9 million of excess tax benefits from the exercise of
nonqualified employee stock options for the six months ended November 30, 2009
and 2008, respectively.





24


Stock
Repurchase Program




The
Company instituted a stock repurchase program in June 1998. In August 2009, the
Board of Directors authorized the Company to repurchase an additional 2,000,000
shares of the Company’s common stock under this repurchase program, bringing the
total authorized shares to 11,375,000.





During
the three and six months ended November 30, 2009, approximately 300,000 and
650,000 shares were repurchased in the open market under the 1998 repurchase
plan for $5.5 million and $11.6 million, respectively.  The Company
repurchased 200,000 shares for $4.7 million during the three and six months
ended November 30, 2008.  Shares that are repurchased by the Company are
returned to the status of authorized but unissued.





As of
November 30, 2009, 9,178,356 shares had been repurchased under the program,
leaving 2,196,644 shares available for repurchase.  The Company’s
stock repurchase program does not have an expiration date.





Contingent
Liabilities





We record
contingent liabilities resulting from asserted and unasserted claims against us
when it is probable that a liability has been incurred and the amount of the
loss is reasonably estimable. We disclose contingent liabilities when there is a
reasonable possibility that the ultimate loss will exceed the recorded
liability. Estimating probable losses requires analysis of multiple factors, in
some cases including judgments about the potential actions of third-party
claimants and courts. Therefore, actual losses in any future period are
inherently uncertain. We currently are involved in certain legal proceedings. We
do not believe any of these proceedings will have a material adverse effect on
our consolidated financial position. It is possible, however, that future
results of operations for any particular quarterly or annual period could be
materially affected by changes in our assumptions or the effectiveness of our
strategies related to these proceedings. Contingent liabilities are described in
Note 9 to the condensed consolidated financial statements.





Future
Cash Requirements and Restrictions





We expect
that cash and cash equivalents and cash flows from operations will be sufficient
to support our operations and planned capital expenditures for at least the next
12 months. There are no restrictions on our subsidiaries with respect to sending
dividends, or making loans or advances to Immucor.





Critical
Accounting Policies





General





We have
identified the policies below as critical to our business operations and the
understanding of our results of operations. The impact and any associated risks
related to these policies on our business operations are discussed throughout
Management’s Discussion and Analysis of Financial Condition and Results of
Operations where such policies affect our reported and expected financial
results.  For a detailed discussion on the application of these and
other accounting policies, see the notes to the condensed consolidated financial
statements of this quarterly report on Form 10-Q and the notes to the
consolidated financial statements and the Management’s Discussion and Analysis
of Financial Condition and Results of Operations contained in our Annual Report
on Form 10-K for the fiscal year ended May 31, 2009, as filed with the SEC on
July 24, 2009. Senior management has discussed the development and selection of
critical accounting estimates and the related Management’s Discussion and
Analysis of Financial Condition and Results of Operations disclosure with the
Audit Committee of our Board of Directors. We believe that our most critical
accounting policies and estimates relate to the following:





i.
            Revenue
      recognition


ii.
            Trade
      accounts receivable and allowance for doubtful
  accounts


iii.
            Inventories


iv.
            Goodwill


v.
            Income
      taxes


vi.
            Share-based
      compensation





25




i)
Revenue Recognition





In
accordance with ASC 605-10-S25, “Revenue Recognition: Overall: Recognition”, we
recognize revenue when the following four basic criteria have been
met:  (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred or services are rendered; (3) the fee is fixed and determinable;
and (4) collectability is reasonably assured.  Should changes in
conditions cause management to determine these criteria are not met for certain
future transactions, revenue recognized for any reporting period could be
adversely affected.





·      Reagent
sales


Revenue
from the sale of our reagents to end users is primarily recognized upon shipment
when both title and risk of loss transfer to the customer, unless there are
specific contractual terms to the contrary.  Revenue from the sale of
our reagents to distributors is recognized FOB customs clearance when both title
and risk of loss transfer to the customer.





·      Medical instrument
sales


Revenue
from the sale of our medical instruments without multiple deliverables is
generally recognized upon shipment and completion of contractual
obligations.  Revenue from rentals of our medical instruments is
recognized over the term of the rental agreement.  Instrument service
contract revenue is recognized over the term of the contract.





In cases
of sales or rentals of instruments with multiple deliverables, we recognize
revenue on the sale of medical instruments in accordance with ASC 605-25
“Revenue Recognition: Multiple-Element Arrangements.” Our medical instrument
sales contracts with multiple deliverables include the sale or rental of an
instrument (including delivery, installation and training), the servicing of the
instrument during the first year, and, in many cases, price guarantees for
reagents and consumables purchased during the contract period.  We
have determined the fair value of certain of these elements, such as training
and first year service.  If the agreement does not include any price
guarantees, the sales price in excess of the fair values of training and service
is allocated to the instrument itself and recognized upon shipment and
completion of contractual obligations relating to training and/or
installation.  The fair value of a training session is recognized as
revenue when services are provided.  The fair value of first year
service is recognized over the first year of the contract.  If the
agreement contains price guarantees, the entire arrangement consideration is
deferred and recognized over the related guarantee period due to the fair value
of the price guarantee not being determinable at the point of
sale.  The allocation of the total consideration, which is based on
the estimated fair value of the units of accounting, requires judgment by
management.





ii) Trade Accounts Receivable and
Allowance for Doubtful Accounts





Trade
receivables at November 30, 2009, totaling $60.8 million, and at May 31, 2009,
totaling $57.0 million, are net of allowances for doubtful accounts of $2.4
million and $2.2 million, respectively. The allowance for doubtful accounts
represents a reserve for estimated losses resulting from the inability of our
customers to pay their debts. The collectability of trade receivable balances is
regularly evaluated based on a combination of factors such as customer
credit-worthiness, past transaction history with the customer, current economic
industry trends and changes in customer payment patterns.  If it is
determined that a customer will be unable to fully meet its financial
obligation, such as in the case of a bankruptcy filing or other material events
impacting its business, a specific allowance for doubtful accounts is recorded
to reduce the related receivable to the amount expected to be
recovered.





iii)
Inventories





Inventories
are stated at the lower of cost (first-in, first-out basis) or market (net
realizable value).  Cost includes material, labor and manufacturing
overhead.  We use a standard cost system as a tool to monitor
production efficiency. The standard cost system applies estimated labor and
manufacturing overhead factors to inventory based on budgeted production and
efficiency levels, staffing levels and costs of operation, based on the
experience and judgment of management. Actual costs and production levels may
vary from the standard established and such variances are charged to the
consolidated statement of income as a component of cost of
sales.  Since U.S. generally accepted accounting principles require
that the standard cost approximate actual cost, periodic adjustments are made to
the standard rates to approximate actual costs.  No material changes
have been made to the inventory policy during the second quarter of fiscal
2010.





26


iv)
Goodwill





On
adoption of ASC 350, “Intangibles – Goodwill and Other”, goodwill and indefinite
lived intangible assets are no longer amortized but are tested for impairment
annually or more frequently if impairment indicators
arise.  Intangible assets that have finite lives continue to be
amortized over their useful lives.





We
evaluate the carrying value of goodwill in the fourth quarter of each fiscal
year and between annual evaluations if events occur or circumstances change that
would more likely than not reduce the fair value of the reporting unit below its
carrying amount. Such circumstances could include, but are not limited to: (1) a
significant adverse change in legal factors or in business climate, (2)
unanticipated competition, or (3) an adverse action or assessment by a
regulator. When evaluating whether goodwill is impaired, we compare the fair
value of the reporting unit to which the goodwill is assigned to the reporting
unit’s carrying amount, including goodwill.  The fair value of the
reporting unit is estimated using primarily the income, or discounted cash
flows, approach. If the carrying amount of a reporting unit exceeds its fair
value, then the amount of the impairment loss must be measured.  The
impairment loss would be calculated by comparing the implied fair value of the
reporting unit’s goodwill to its carrying amount.  In calculating the
implied fair value of the reporting unit’s goodwill, the fair value of the
reporting unit is allocated to all of the other assets and liabilities of that
unit based on their fair values.  The excess of the fair value of a
reporting unit over the amount assigned to its other assets and liabilities is
the implied fair value of goodwill. An impairment loss would be recognized when
the carrying amount of goodwill exceeds its implied fair value.





v)
Income Taxes





Our
income tax policy records the estimated future tax effects of temporary
differences between the tax bases of assets and liabilities and amounts reported
in the accompanying consolidated balance sheets, as well as operating loss and
tax credit carry-forwards. The value of our deferred tax assets assumes that we
will be able to generate sufficient future taxable income in certain tax
jurisdictions, based on estimates and assumptions. If these estimates and
related assumptions change in the future, we may be required to record
additional valuation allowances against our deferred tax assets resulting in
additional income tax expense in our consolidated statements of income. In
assessing the realizability of deferred tax assets, we consider whether it is
more likely than not that some portion or all of the deferred tax assets will
not be realized, and we consider the scheduled reversal of deferred tax
liabilities, projected future taxable income, carry-back opportunities, and
tax-planning strategies in making this assessment.  We assess the need
for additional valuation allowances quarterly.





The
calculation of tax liabilities involves significant judgment in estimating the
impact of uncertainties in the application of complex tax laws. Although updates
to ASC 740, “Income Taxes”, which we adopted at the beginning of fiscal 2008,
provide further clarification on the accounting for uncertainty in income taxes
recognized in the financial statements, the new threshold and measurement
attribute prescribed by the FASB will continue to require significant judgment
by management. Resolution of these uncertainties in a manner inconsistent with
our expectations could have a material impact on our results of
operations.





vi)
Share-based Employee Compensation





We
adopted the provisions of ASC 718, “Compensation – Stock Compensation”, on June
1, 2006, using the modified prospective transition method, which requires that
(i) compensation costs be recorded as earned for all unvested stock options
outstanding at the beginning of the first fiscal year of adoption based on the
grant date fair value, and (ii) compensation costs for all share-based payments
granted or modified subsequent to the adoption be recorded, based on the grant
date fair value estimated in accordance with the provisions of ASC
718.  On adoption, we elected to attribute the value of share-based
compensation to expense using the straight-line method, which was the method
previously used for disclosing our required pro forma
information.




We
elected to estimate the fair value of our share-based payment awards using the
Black-Scholes option-pricing model (the “Black-Scholes model”), which was
previously used for disclosing our pro forma information. The Black-Scholes
model was developed for use in estimating the fair value of traded options that
have no vesting restrictions and are fully transferable.  The
Black-Scholes model requires the input of certain assumptions. Our stock options
have characteristics significantly different from those of traded options, and
changes in the assumptions can materially affect the fair value
estimates.





27


We have
calculated our additional paid in capital pool (“APIC pool”) based on the actual
income tax benefits received from exercises of stock options granted after the
effective date of ASC 718 using the long method. The APIC pool is available to
absorb any tax deficiencies subsequent to the adoption of ASC
718.





ITEM
3.  Quantitative and Qualitative Disclosures about Market
Risk





Except as
noted below in Part II, Item 1A, there have been no material changes regarding
the Company’s market risk position since the filing of its Annual Report on Form
10-K for the fiscal year ended May 31, 2009 as filed with the SEC on July 24,
2009.  For further details regarding the quantitative and qualitative
disclosures about market risk, see Item 7A, Quantitative and Qualitative
Disclosures About Market Risk, contained in the Company’s Annual Report on Form
10-K for the fiscal year ended May 31, 2009.





ITEM
4.  Controls and Procedures





As
required by Rule 13a-15 under the Securities Exchange Act of 1934, an
evaluation was carried out under the supervision and with the participation of
our management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of November 30, 2009.  Based upon our
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that, as of November 30, 2009, our disclosure controls and procedures
were effective to provide reasonable assurance that information required to be
disclosed in the reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the applicable rules and forms, and that it is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.




There
were no changes in our internal control over financial reporting during the
quarter ended November 30, 2009 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.




PART
II





OTHER
INFORMATION





ITEM
1. Legal Proceedings





In April
2009, Immucor, Inc. received a subpoena from the United States Department of
Justice, Antitrust Division (“DOJ”), requiring it to produce documents for the
period beginning September 1, 2000 through the present, pertaining to an
investigation of possible violations of the federal criminal antitrust laws in
the blood reagents industry. The Company has been cooperating with the DOJ and
intends to continue cooperating. At this time the Company cannot reasonably
assess the timing or outcome of the investigation or its effect, if any, on its
business.




In
October 2007, the Company reported that the Federal Trade Commission (“FTC”) was
investigating whether Immucor violated federal antitrust laws or engaged in
unfair methods of competition through three acquisitions made in the period from
1996 through 1999, and whether Immucor or others engaged in unfair methods of
competition by restricting price competition.  The FTC letter
requested that the Company provide certain documents and information to the FTC
concerning those acquisitions and concerning its product pricing activities
since then.  In July 2008, the FTC formalized its document and
information requests into a Civil Investigative Demand (“CID”) and also required
the Company to provide certain additional information within the same general
scope of its previous requests. Most recently, the FTC has served a CID which
requires that it be provided with copies of documents provided to the DOJ in the
DOJ’s investigation described above.  The Company has been cooperating
with the FTC and intends to continue cooperating. At this time the Company
cannot reasonably assess the timing or outcome of the investigation or its
effect, if any, on its business.




Beginning
in May 2009, more than 30 lawsuits were filed in 10 different United
States District Courts against the Company, Ortho-Clinical Diagnostics, Inc. and
Johnson & Johnson Health Care Systems, Inc. alleging that the defendants
conspired to fix prices at which blood reagents are sold, asserting claims under
Section 1 of the Sherman Act, and seeking declaratory and injunctive relief,
treble damages, costs, and attorneys’ fees. These cases are identified in
Exhibit 99.1, which is hereby incorporated herein by reference.  All
of these complaints make substantially the same allegations and seek to certify
a class of persons and entities who purchased blood reagents from any of the
defendants between January 1, 2000 and the present. Most of the complaints limit
the proposed class to persons and entities in the United States, but some do not
contain that limitation.  In August 2009, these cases were ordered to be
centralized in the United States District Court for the Eastern District of
Pennsylvania.  That court now has before it motions to appoint interim
lead counsel for plaintiffs.  There has been no discovery in any of
these cases, and no court has made a determination whether any of the
plaintiffs’ claims have merit or should be allowed to proceed as a class action.
The Company intends to vigorously defend against these cases. At this time the
Company cannot reasonably assess the timing or outcome of this litigation or its
effect, if any, on its business.




28


In August
2009, the City of Pontiac General Employees’ Retirement System filed a class
action lawsuit in the United States District Court for the Northern District of
Georgia against the Company and nine of its current and former directors and
officers, alleging that the defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 (City of Pontiac General Employees’ Retirement
System v. Immucor, Inc., et al., Civil Action No. 1:09-CV-2351-TWT (N.D.
Ga.)).   The plaintiff seeks to certify a class of purchasers of
the Company’s Common Stock between October 19, 2005 and April 23,
2009.  The complaint alleges that the defendants failed to disclose
that the Company was operating in violation of United States antitrust
laws.   In September 2009, Thomas Schlenker filed a similar class
action lawsuit in the United States District Court for the Eastern District of
Pennsylvania against the Company and ten of its current and former directors and
officers, also alleging that the defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 (Schlenker v. Immucor, Inc., et al., Civil
Action No. 2:09-CV-04297-JD (E.D. Pa.)).  This plaintiff also seeks to
certify a class of purchasers of the Company’s securities for the same class
period.  The Company has not yet responded to either complaint, but
intends to vigorously defend these lawsuits.  At this time, the
Company cannot reasonably assess the timing or outcome of this litigation or its
effect, if any, on its business.




Other
than as set forth above or as previously reported in the Company’s Annual Report
on Form 10-K for the fiscal year ended May 31, 2009, as filed with the SEC on
July 24, 2009, we are not currently subject to any additional material legal
proceedings, nor, to our knowledge, is any material legal proceeding threatened
against us.  However, from time to time, we may become a party to
certain legal proceedings in the ordinary course of business.




ITEM
1A.  Risk Factors





Except as
noted below, there have been no material changes to the risk factors set forth
in our Annual Report on Form 10-K for the year ended May 31, 2009, as filed with
the SEC on July 24, 2009. In addition to the other information set forth in this
report, you should carefully consider the factors discussed in Part I, Item 1A,
“Risk Factors” in our Annual Report on Form 10-K which could materially affect
our business, financial condition or future results. The risks described in our
Annual Report on Form 10-K are not the only risks facing the Company. Additional
risks and uncertainties not currently known to us or that we currently deem
immaterial also may have a material adverse effect on our business, financial
condition and/or operating results.





On-going
antitrust investigations and litigation could have a material and adverse effect
on our business.





As noted
in Item 1, Legal Proceedings above, we are under investigation by the Department
of Justice ("DOJ") concerning possible criminal violations of the antitrust
laws, and we are also the subject of a number of private civil actions alleging
price fixing and seeking class certification, as well as a shareholder action
alleging a failure to disclose antitrust violations and also seeking class
certification. The DOJ could seek an indictment and conviction against us, which
could result in the imposition of substantial fines, among other remedies. Were
plaintiffs to prevail in one or more of the pending civil actions, we also could
have to pay significant amounts, including treble damages and attorneys’ fees in
certain cases. Also as noted in Item 1 above, the Federal Trade Commission
(“FTC”) is investigating whether Immucor violated federal antitrust laws or
engaged in unfair methods of competition, through three acquisitions made in the
period from 1996 through 1999 or by restricting price competition. The FTC could
decide to commence administrative and possibly federal court proceedings for
purposes of determining whether there has been a violation and might seek to
impose a variety of remedies for any violation including injunctive relief,
divestiture of assets and/or disgorgement of profits. The imposition of any of
the above remedies could have a materially adverse impact on our business,
financial condition and results of operations. In addition, regardless of the
ultimate outcome in the above matters, we expect to incur significant expenses,
including attorneys’ fees, in responding to and defending against issues raised
in the above matters.





29


ITEM
2.     Unregistered Sales of Equity Securities and Use
of Proceeds





The
Company did not sell unregistered securities during the period covered by this
report.





The
Company repurchased shares of its Common Stock under the Company’s stock
repurchase program during the quarter ended November 30,
2009:







Period
              
              Shares
      Purchased
              
              
              Average
      Price Per Share
              
              
              Shares
      Purchased to Date as Part of Publicly Announced Plan
              
              
              Maximum
      # of Shares Available to Purchase Under the PlanSeptember
      1-30, 2009
              
              
              -
              
              
              $
              -
              
              
              
              8,878,356
              
              
              
              2,496,644October
      1-31, 2009
              
              
              -
              
              
              $
              -
              
              
              
              8,878,356
              
              
              
              2,496,644November
      1-30, 2009
              
              
              300,000
              
              
              $
              18.44
              
              
              
              9,178,356
              
              
              
              2,196,644


The
Company instituted a stock repurchase program in June 1998.  During
the quarter ended August 31, 2009, the Board of Directors authorized the Company
to repurchase an additional 2,000,000 shares of the Company’s common stock under
this repurchase program bringing the total authorized shares to
11,375,000.  As of November 30, 2009, 9,178,356 shares had been
repurchased under the program, leaving 2,196,644 shares available for
repurchase.  The Company’s stock repurchase program does not have an
expiration date.





ITEM
4.      Submission of Matters to a Vote of
Security Holders




The
Company held its Annual Meeting of Shareholders on November 12, 2009. The
following is a summary of the matters voted on at that meeting:




The
shareholders voted on the election of seven directors, all incumbent directors
of the Company, to serve until the Company’s next Annual Meeting of Shareholders
or until their successors are duly elected and have qualified. Each of these
directors was elected by the affirmative vote of a plurality of the votes cast
at the Annual Meeting. The number of shares cast for and the number of shares
withheld, with respect to each of these persons, were as follows:






Name
              
              Votes
      For
              
              Votes
      WithheldJames
      F. Clouser
              
              65,273,317
              
              534,407Dr.
      Gioacchino DeChirico
              
              63,605,712
              
              2,202,012Ralph
      A. Eatz
              
              63,489,999
              
              2,317,725Dr.
      Paul V. Holland
              
              65,225,482
              
              582,242Ronny
      B. Lancaster
              
              65,275,720
              
              532,004Chris
      E. Perkins
              
              65,275,601
              
              532,123Joseph
      E. Rosen
              
              63,591,351
              
              2,216,373




The
shareholders also voted to ratify the appointment of Grant Thornton LLP as the
Company’s independent registered public accounting firm for the fiscal year
ending May 31, 2010. The number of shares cast for and against, abstentions and
broker non-votes, with respect to this matter, were as follows:




Votes
      For
              
              65,666,664Votes
      Against
              
              69,372Abstentions
              
              71,688Broker
      Non-votes
              
              0








30


Finally,
the shareholders voted to approve the amendment to the Amended and Restated
Rights Agreement between the Company and Computershare Trust Company N.A. as
rights agent.  The number of shares cast for and against, abstentions
and broker non-votes, with respect to this matter, were as follows:




Votes
      For
              
              35,129,519Votes
      Against
              
              24,300,664Abstentions
              
              11,708Broker
      Non-votes
              
              6,265,833






ITEM
6.  Exhibits





31.1    Certification
of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule
15d-14(a).





31.2    Certification
of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule
15d-14(a).





32.1    Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.





32.2    Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.





99.1     Summary
of Lawsuits








SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








IMMUCOR,
INC.


(Registrant)





Date:   January 7,
      2010
              By:
              /s/ Dr.
      Gioacchino De ChiricoDr.
      Gioacchino De Chirico, Chief Executive Officer
                (on
      behalf of Registrant and as Principal Executive Officer)Date:   January 7,
      2010
              By:
              /s/
      Richard A. FlyntRichard
      A. Flynt, Chief Financial Officer
                (Principal
      Financial and Accounting Officer)








31


EXHIBIT
INDEX








Number
            Description





31.1
            Certification
      of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule
      15d-14(a).





31.2
            Certification
      of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule
      15d-14(a).





32.1
            Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.





32.2
            Certification
      of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.





99.1
            Summary
      of Lawsuits (incorporated
      by reference to Exhibit 99.1 to Immucor, Inc.’s quarterly report on Form
      10-Q filed on October 2,
2009).







32